Strategies & Benefits of Implementing Knowledge Management Essay

1.0 Introduction

Knowledge Management (KM) is a strategic method of locating, defining, collecting, storing, sharing, organising, receiving and adopting valuable information and knowledge within an organisation. It is considered as an important tool that enables an organisation to constantly shift and improve to remain relevant in the ever changing business world. The integration of today’s advanced IT solutions coupled with strategic management of knowledge is the key to unlocking the true potential of an organisation (He, et al., 2009).

In Malaysia, most managers still use informal methods of collecting and accessing information such as interactions with colleagues and clients (Karim and Hussein, 2008). Examples of this are communications during company meetings, internal surveys and questionnaires, or a simple chat during lunch break. Apart from that, the study also shows that most Malaysian managers use the internet, printed materials and company’s database to capture information. Many organisations in Malaysia still use the traditional methods of storing information using ordinary computer tools which lacks the robustness in processing and managing large amounts of information (Karim and Hussein, 2008).

The diagram below shows the evolution of knowledge management initiatives:

Figure 1. (Source: Hoegl & Schulze 2005, How to Support Knowledge Creation in New Product Development: An Investigation of Knowledge Management Methods, 6, p.264)

This report presents journal findings on implementing good knowledge management strategies and systems that not only stores existing knowledge but also exploits them into new knowledge. We will then take a look at the various benefits that knowledge management can bring to an organisation internally and externally. This study then concludes with a discussion on the true values of knowledge management and what’s in store for its future.

2.0 Strategies of Implementing Knowledge Management

Karim and Hussein, (2008) stated that the basis of creating a knowledge management strategy is to first understand the information needs and requirements of an organisation. Quality information should be accurate, complex, benefits exceeds the cost of acquiring it, user targeted, relevant, authoritative, timely, and presented in a way that is easy to use. A good knowledge management system must be able to accurately pinpoint valuable information and organise it effectively so that it can be shared and adopted easily by employees.

2.1 Identification of key actors

When designing a knowledge management system, the internal landscape of the organisation needs to be given serious attention, mainly the employees. Managers need to identify key employees or in this case key actors who have critical information about the organisation and business processes (Raub and Wittich 2004). For example a marketing manager who holds the database of all the organisation’s clients and suppliers, and a senior developer who has all the programming scripts or access codes to the organisation’s computer systems. What would happen if these key actors resigned and did not pass on their knowledge and information to their counterparts? The loss of valuable knowledge is one thing, but the risk of these key actors misusing that knowledge for their own personal gain is something that needs to be paid serious attention to.

That is why managers need to identify these key actors, access information from them and store it in the knowledge management system. Due to the nature of resistance to change, managers need to firstly select actors who already have strong support from his/ her subordinates in order to implement a top-down approach. Once these “high-ranking” actors have embraced the knowledge management initiative, their subordinates will have less resistance and will be more willing to take part and contribute.

2.2 Knowledge Management Platform/ System

The use of ICT is essential in developing a well versed knowledge management system to locate, define, collect, store, share, organise, receive and adopt information. This platform needs to be interactive, online and able to be accessed easily to ensure the wide usage by employees. Employees constantly exchange relevant knowledge to one another during informal meetings or chats; therefore the trick is to encourage these people to do the same thing using the knowledge management system (Raub and Wittich 2004).

In order to do this, managers can strategically position the knowledge management system using the concept of a social networking system. Examples are Facebook or YouTube whereby users can easily share their profiles, updates, pictures, videos, music, and various files with one another. By sharing they will also be able to receive information from other users, of which may not be possible for them to obtain alone.

2.3 Spreading the Word – stimulate the use of Knowledge Management

Although the management have implemented a good knowledge management initiative, employees may not support it (He, et al., 2009). The reasons for this could be the reluctant of change, lack of trust, and the notion that they will not receive any benefits from contributing their knowledge. Managers need to motivate employees with rewards and benefits, for example a point based system whereby employees will be given points every time they contribute to the knowledge management system (Yang and Wan, 2004). Employees can exchange collected points to dollars and cents or better yet managers can position points as an important criterion in appraisals.

Another way to help spur employees is by communicating on the many other benefits of sharing knowledge. For example convincing employees that once they start to share information, they will also receive information from their colleagues and other parties involved in the organisation (Yang and Wan, 2004).

Raub and Wittich (2004) suggested the use of internal marketing initiatives to employees such as internal publications of flyers or booklets, meetings and workshops. Aside from that, online bulletins and forums via the company’s website can also be used as a medium to promote the adoption of knowledge management.

3.0 Benefits of Knowledge Management

The successful implementation of knowledge management methodologies has been proven to increase an organisations competitive advantage by being able to properly store and manage valuable information (Massa and Testa, 2009). Below we will briefly discuss the positive impacts of knowledge management to organisations.

3.1 Employee Development – Value Creation

Chen and Huang (2009) concluded that knowledge management is an important mediator between strategic human resource practice that involves employees and innovation performance which then affects value creation. An organisation needs to leverage human capital to develop expertise in order for innovation to occur. When employees share knowledge with one another, they will directly and indirectly improve their skill sets thus making them more efficient and effective in completing their tasks.

For example, the usual amount of time that it takes for employee A to finish a task is 1 hour because he/ she only knows how to do the job in that specific way. Employee B on the other hand has worked much longer and knows how to complete the task in half the time it takes employee A and with much better results. The sharing of knowledge from employee B will help employee A be more efficient and in the bigger picture contribute positive effects to the organisation.

New Product Development (NPD) strategy is vital in ensuring the sustainability of an organisation in the market. A statistical study proved the correlation between knowledge management methods and product development strategy with the performance of new product development (Liu, et al., 2005). Employees with more knowledge and resources will be better equipped in product innovation initiatives thus creating quality products and services.

Organisations can reduce the cost for training new and existing employees as various resources can be accessed simultaneously via the knowledge management system. Employees can also use the system to interact with their colleagues to ask questions and even share work related experiences. This will indirectly create a much better working environment as everyone is connected and will help each other in increasing productivity and standards.

3.2 Increased Customer Satisfaction, Trust and Loyalty

Organisations must couple knowledge management initiatives with Customer Relationship Management (CRM) in order to provide the best products and services to customers (Salomann, et al., 2005). The availability of CRM enables customers to communicate directly with organisations for support or complaints. This will create a good and long lasting relationship between both parties as customers will feel that the organisation is transparent, genuine and takes care of the customer’s best interest.

A case study at Siemens shows how the company uses information from customer’s feedback to support product innovation initiatives. The results show that Siemens was not only able to channel customer’s complaints to a positive effect on designing their future products, but also able to convert unhappy customers into loyal ones once approached personally and seriously (Salomann, et al., 2005). Organisations should always ensure that their products and services match customer requirements; therefore emphasis on these requirements must be made during new product development projects.

The improvement of product quality as discussed in the previous subtopic also contributes to the increase in satisfaction as customers will enjoy better products and services. The implementation of knowledge management in the area of CRM enables organisations to lock in customers, save costs and increase market share (Lin, et al., 2006).

3.3 Support Tool for Marketing Initiatives

Information gathered from CRM activities can be of great value to the marketing functions of an organisation (Shaw, et al., 2001). Data mining tools can be used to gather hidden customer data while knowledge management can manage the data accordingly to aid in decision support based on the organisation’s marketing objectives.

Knowledge-based marketing increases the success rate of marketing initiatives and reduces cost as everything has been well calculated based on real world facts. A well versed knowledge management system can be used to profile customers and generate analysis for future marketing initiatives (Shaw, et al., 2001).

A customer profile tells marketers everything about customers buying patterns and helps in making important marketing decisions. Marketers can predict customer’s purchasing trend by observing their frequency of purchases, amount of purchases, time gaps between purchases, and identify typical customer groups (Shaw, et al., 2001). By studying customer’s profile, marketers can predict customer’s future purchases and compute the success rate of marketing campaigns.

Organisations can evaluate the acceptance rate of their products and services and forecast future sales based on the analysed data from the knowledge management system (Shaw, et al., 2001). This information can be conveyed to the R&D department for future product developments or enhancements, the marketing department for designing future marketing campaigns, and the decision makers for investments in future products, projects, and campaigns.

Effective customer profiling will lead to increase in profit margins and market share as products and services are developed based on customer’s requirements. Organisations also save costs via marketing campaigns that precisely target customers that have the highest probability of making a purchase.

3.4 Better Coordination of Technology Alliances

Technology Alliances are business relationships formed between different organisations to obtain resources such as information and expertise that they do not possess. There are many types of different alliances such as Licensing Agreements, Marketing and Distribution Agreements, Production and Development Agreements, Minority Equity Investments, Joint Ventures, and finally Mergers and Acquisitions (Awazu, 2006).

Managing knowledge in alliances is crucial as the information shared can be used to gain competitive advantage and improve business processes. The internal benefits of such alliances are improved project process flow, improved cost saving methods, improved human capital expertise, improved product innovation and adoption of new technology. Externally, organisations will benefit from improved quality of products and services, easier penetration into unfamiliar markets, better distribution channels, and increase in market share and profitability.

4.0 Conclusion

Based on the discussions above, it is clear that Knowledge Management is an essential tool that enables organisations to improve their competitiveness by creating new knowledge from the exploitation of existing knowledge. The true value of knowledge management is the effectiveness of the managed knowledge itself towards enriching employee’s experiences in the organisation. It is not merely a question of how to gather knowledge but rather how to use that knowledge to increase efficiency and incite innovation in the workforce.

On-demand access to a well structured knowledge enables employees to address any situation using their own personal knowledge coupled with knowledge from every other employee in the organisation that have experience in dealing with similar situations. This means that more innovative methods will be used to get the job done more efficiently and effectively. However, without on-demand access to that knowledge database, that same situation will only be addressed based on that particular employee’s personal information and experiences.

The reality of knowledge management today is that employees want to interact with one another; they want to see firsthand how the other person has succeeded in improving work efficiency and effectiveness, what are the dos and don’ts that they must follow in order to emulate the success. They need direct guidance and support from the person who have gone through that specific phase and succeeded.

Knowledge management in the future is all about building social relationships and human connections with one another in an organisation. The growing use of social networks is an important key element in the future of knowledge management as it enables people to connect across any physical borders. An example situation in an organisation is that a junior level executive can simply connect and exchange knowledge with a senior level executive or even the general manager via social networks. Even Prime Ministers have their own Facebook page nowadays; bridging the knowledge gap even further thus creating borderless knowledge management ecology.

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