Even Today, Having a Knowledge Management Strategy is More Important than You Think

Editor’s Note: Mostafa Sayyadi is a Senior Management Consultant, and Former Leadership Team Member of San Diego-based The Change Leader Consulting Inc.

It is important for executives to understand how knowledge can be categorized. There are two important taxonomies of knowledge that need to be discussed. The following section addresses these taxonomies in depth to set the record straight upon the importance of knowledge management.

Tacit and Explicit Knowledge

Why would executives care whether knowledge is tacit or explicit? The simple answer is that tacit knowledge is not shared and sometimes bottled up in individuals causing a bottleneck in the organization. If knowledge can be categorized as tacit and explicit knowledge then how can executives manage knowledge to enhance productivity?

Since tacit knowledge is knowledge that exists in the minds of organizational members which is gained by their individual experiences, and is difficult to formalize and transfer unless directed to do so, executives need to pinpoint and encourage this type of knowledge to be drawn out of followers .

More controllable, explicit knowledge is knowledge that is highly formalized and codified, and can be easily recorded and communicated through formal and systematic language, and manifested in rules and procedures providing the necessary tools and processes for executives to manage. It can also be captured in expert systems and tapped by many people throughout the organization via intranet.

Executives know that explicit knowledge is more formal and has the potential to be more easily shared. When it is expressed in words and specifications, it is much more useful compared to tacit knowledge.

Private and Public Knowledge

Since executives are constantly dealing with the public——especially if they are a publicly traded company, the private and public knowledge is something they pay a great deal of attention to. Of course, this is not new but worth mentioning. For example, two scholars by the names of Sharon Matusik and Charles Hill, argue that knowledge in organizations can be categorized as either private or public knowledge and can be advantageous to executive decision-making.

Firm specific knowledge must guarded and not shared with the competition. Any leak of such information may expose the organization and increase the operational risk. Contrary to private knowledge, public knowledge differs in that it is not unique for any organization. Public knowledge may be an asset and provide potential benefits when posted in social media and other means of communication.

It is important for executives to consider the ownership of knowledge as a factor which is a significant contributor to the knowledge of organizations. Moreover, knowledge emerges in two additional forms, including the knowledge that is only accessible by one company and the knowledge that is accessible to all companies. The best approach to knowledge is for executives to know which knowledge is to remain private and which to go public with. A mistake in this area may be vital to the organizations and executives must choose wisely.

The Importance of Knowledge Management for Organizations

Similar to customer relationship management, knowledge management is an enabler for identifying and satisfying customer’s needs and manifests itself as a significant driver that motivates the development of relationships with customers. Scholars have proven that executives can use knowledge management to improve customer satisfaction through acquiring additional knowledge from customers, developing better relationships with them, and providing a higher quality of service and/or products for them.

The key function of knowledge management is to help executives use it for employee development. In this context, training is becoming the forefront to success in organizations worldwide. The more training the better the return on investment to shareholders. Why is this, you may ask? Because learning is a process that leads to acquiring new insights and knowledge, and potentially to correct sub-optimal or ineffective actions and behaviors that cause companies to spiral out of control.

How can we establish the relationship between knowledge management and organizational learning? Well, one scholar by the name of Hari Bapuji Bayyavarapu suggests a learning-based approach to knowledge management to understand how organizational learning is related to various processes of knowledge management. More importantly, the effective implementation of knowledge management requires learning and sharing of best practices and experiences among employees and thus facilitates organizational processes. A research conducted by Adela Lau and Eric Tsui show that effective organizational learning requires various processes such as knowledge acquisition, collaboration, dissemination, sharing, generation, and storage to acquire knowledge within an organization.

Thus, knowledge management improves organizational processes through various practices and can also enhance organizational learning that increases both follower engagement and personal development.

Knowledge Management is the Key to Company Performance

Executives today realize that knowledge is the one of most strategic factors for organizations from a competitive standpoint. The question lies in how to maintain it, store it, retrieve it, and protect it. This has been a focal point of organizations since the corporation was first initiated and will always be an ongoing issue for leaders. For example, knowledge creation and utilization pertinent to an organization’s success.

Thus, executives create new ideas and knowledge for innovation and to motivate employees to solve their current problems in a more innovative manner. The acquisition of new knowledge is an ongoing process and can be essential to identify the needs of customers and recognize changes in the business environment.

Next, knowledge is integrated into organizational processes and procedures through sharing knowledge around the organization. In knowledge integration, the accumulated knowledge is shared and synthesized with an aim to providing higher quality products and services. This can improve financial and non-financial performance in various metrics such as the customer focus, the quality of products and services, and the organizational revenue. Shared knowledge can contribute to the development of a learning organization in which people continuously grow and develop both personally and professionally.

Finally, knowledge is shared with other organizations operating in the business environment to meet new changes and challenges and at the same time should not be leaked to the competition in any shape or form unless agreed upon by senior executives. Therefore, knowledge reconfiguration enables organizations to actively respond to environmental changes through developing interactions and awareness from the external environment. Knowledge management can, therefore, improve financial and non-financial performance through increased sales, customer satisfaction, learning opportunities, innovation, and the quality of products and services.

In Conclusion

This article is about getting the information needed to be successful in the right hands of executives worldwide. Some scholars emphasize that knowledge management is tantamount to executive’s success. Knowledge management has been a focal point of executive span of control but has not been associated with company performance enough to make it an integral part of organizational success. I found that knowledge management is a latent concept but one of great importance to executives. For the scholar’s corner, I place a great deal of emphasis on the literature on knowledge management as a significant indicator for organizational performance.

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