Knowledge management – if companies knew what they knew

Knowledge is one of the most important factors in the global digital marketplace. How well a company manages this valuable resource therefore plays a crucial role in determining its future success. Yet knowledge management is a complex task that cannot be handled using software alone.
August 26, 2020
8 min

Is there such a thing as a “stupid” company? Can a company also suffer from dementia? Viewed from a knowledge management perspective, the answer is a resounding yes. Organizations that lose know-how critical to their success – for example, when top performers leave and simply take their expertise with them – or do not know what they know suffer from a problem that needs to be taken seriously.

Compared to competitors that have organizational knowledge management, these companies do not learn from their mistakes and so continue to make them again and again. What’s more, this also makes them less agile, as mistakes cost valuable time, which their better-placed rivals can profitably use to optimize their processes or develop innovations. In addition, the lack of a structured knowledge management system costs companies money. For instance, it takes longer for their new employees to master internal processes and contribute to the organization’s financial success. According to a study by KPMG, costs of 50,000 to 500,000 euros a year are incurred when knowledge transfer takes too long or is unsuccessful.

Knowledge management – what exactly is it?

For years, knowledge management has been regarded as a strategic way out of the costly labyrinth of ignorance. However, it is a complex subject, as a look at the differing definitions of the term shows.

  • For example, here is the definition in the Gabler Wirtschaftslexikon: “Knowledge management involves acquiring, developing, transferring, storing and using knowledge.”
  • According to German Wikipedia, on the other hand, it is the methodical influence on the knowledge base of a company (organizational knowledge management) or individual (personal knowledge management). This definition also states that the knowledge base includes all data, information, knowledge and skills that this corporate structure or person has or should have for completing their varied range of tasks.

According to these definitions, knowledge management thus aims to pool existing and new knowledge, manage it effectively and make it available in the most useful possible form for solving problems. However, this also means that managing knowledge is far more than just information management.

The challenge – passing on experience-based knowledge

A quick comparison of the terms “information” and “knowledge” clearly shows why knowledge is more than the mere transfer of information:

Knowledge is created through connecting information.
© tts GmbH

Knowledge is created through connecting information.

  • Information consists of signals that a person is particularly interested in at a specific moment because they help him/her achieve a personal goal, whether it be a job vacancy, the latest travel news or financial information for a shareholder. Once the information has served its purpose, it loses its value.
  • By contrast, knowledge is created through making connections. We link different pieces of information using our previously gained and experience-based knowledge, interpret it and make it usable. Knowledge therefore depends on context and experience. It is always bound up with the individual, but is also the only product that increases through sharing.

This raises the question of whether pooled knowledge can be shared between individuals at all and, if so, how it can be made usable for others and how “knowledge silos” can be prevented. For these purposes, knowledge management distinguishes between “explicit” and “implicit” knowledge:

  • Explicit or “embrained” knowledge is factual knowledge, as found in textbooks, work instructions and organizational charts. This is relatively easy to share. For instance, strategically important factual knowledge from individuals can be easily stored, updated and shared in a company wiki, database or knowledge groupware with an intelligent document management system.
  • Implicit or “embodied” knowledge, by contrast, encompasses everything we have learned through experience. Passing on this type of knowledge is much harder, as people who have it are often not at all aware of why they can do something particularly well – for instance, when a sales representative “feels” which tactic will deliver the desired result. To enable this know-how to be passed on and used by others, implicit knowledge needs to be converted into explicit knowledge. However, this is only possible under certain circumstances and calls for intensive interpersonal exchanges, for example as part of mentoring or coaching. Alternatively or additionally, social software that makes personal knowledge available to others through intensive team dialog can also be used for this purpose.

Companies and organizations can only use existing know-how potential to pursue their goals and respond effectively to new challenges if they transform implicit to explicit knowledge.
© tts GmbH

Companies and organizations can only use existing know-how potential to pursue their goals and respond effectively to new challenges if they transform implicit to explicit knowledge.

It is precisely companies’ implicit experience-based knowledge that is a significant source for their innovations, process optimizations and competitive advantages. After all, the more complex a task is, the more implicit knowledge is needed to complete it. Organizations need a well-thought-out strategy if this knowledge is no longer to be just in the mind of a single employee but also to become usable across a team. Although developing this involves a certain amount of work, it is worth the effort. Ultimately, companies and organizations can only use existing know-how potential to pursue their goals and respond effectively to new challenges if they have a strategic knowledge management system.

The right strategy – defining and developing fields of knowledge

Unfortunately, there is no such thing as a one-size-fits-all strategy for knowledge management, as each company has its own individual areas of expertise. These determine what internal and external knowledge for optimizing processes and improving responses needs to be identified and integrated across departments. To develop strategic knowledge management, it is therefore first necessary for a company to start with its own requirements and use these to define the areas of expertise in which strategically important knowledge is to be developed and shared. It is then possible to define and establish the processes that can systematically identify, harness, store and use the necessary know-how.

Useful tools help with the transformation

Only then can companies determine the IT solutions and tools that can best support the planned transformation process. For example, wiki knowledge databases that make it possible to store and categorize explicit knowledge and documentation and make this available are ideal for finding relevant documents quickly. Digital workplace concepts provide valuable role-based help with efficiently selecting and contextualizing knowledge. Meanwhile, performance support applications offer vital and, above all, rapid support for specific work, because they ensure users receive the right information at the right time and in their particular context.

Implicit knowledge can be made available on the intranet using social collaboration software, as this software promotes the flow of information between departments and across hierarchies. At the same time, functions such as activity streams and straightforward team building help in searching for and integrating a company’s own experts.

Needs-based knowledge must fit the context

In all cases, it is important to ensure that a knowledge management system does not turn into a document “graveyard”. To make knowledge management a success in practice, a company needs to make knowledge available to its employees by adopting a needs-based approach. The common practice of assembling corporate knowledge in document management systems is just as unfocused as simply purchasing large-scale courses. Both cases lack the necessary tuning to the application context and the adaptation to employee roles. What’s more, bought-in information also lacks the required matching with the company’s specific knowledge base.

The work environment has to be right to foster interaction between staff and the related knowledge transfer.

On top of that, processes, software and IT are not everything. In building a knowledge management system, the physical infrastructure also plays a key role – in other words, workplaces, conference rooms, kitchens or small work and meeting areas. The work environment also has to be right to foster interaction between staff and the related knowledge transfer.

Knowledge management needs a culture that promotes knowledge

Yet successful knowledge management is not just a question of having the right technology and equipment. It also relies on the entire workforce being willing to share knowledge with others and constantly learn new things. This can quickly become a problem when possessing knowledge serves to enhance an employee’s own image or is even seen as a guarantee for safeguarding a job. In practice, the greatest challenge thus also lies in establishing a corporate culture that motivates staff to actively pass on their knowledge. Various options are available for achieving this.

1. Communicate the personal benefits

Anyone who fears negative personal consequences if they share their knowledge with others is unlikely to have their mind changed by arguments such as competitive corporate advantages. The personal benefits that are opened up for employees when they share knowledge therefore need to be highlighted.

2. Sharing needs to be rewarded

Incentive systems and stimulus measures need to be adapted. For instance, successes and associated rewards should not be based on the performance of an individual, but that of the team.

3. Offer social safeguards

Employees who share their knowledge need to be able to reassure themselves they will not suffer negative consequences as a result. For example, passing on knowledge can be made a more important element of employee appraisals and salary decisions.

4. Promote self-organized learning

If employees are to strengthen their involvement, they need the appropriate freedom to undertake further training and unleash their creativity in line with their interests. This is the only way to produce new product ideas or suggestions for improvement and foster a dynamic learning and teaching culture.

5. Create acceptance and avoid demotivation

Knowledge management should also always be linked to specific agreed targets and evaluations. Both of these need to be transparent for employees so they can see the contribution they make to value creation through sharing knowledge and can identify the professional benefits that result from this. Companies also need a greater tolerance of risks and errors so that any setbacks do not lead to lasting demotivation among employees.

Knowledge management – a lively process

It is precisely because knowledge management is a key success factor for companies and organizations that, as far as possible, all staff need to be brought on board without resorting to pressure. In all its phases, knowledge management is an interactive and lively process in which rigid methods and approaches are of little help. Instead, a long-term strategy and appropriate IT solutions provide valuable support. However, what’s much more important is laying the cultural groundwork at the company in the appropriate ways, too, so that all staff are willing to share their knowledge, whether virtually, in person, in a project, on a team or in their network.


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