Taking advantage of all the expertise within an organization is a great way to maximize its potential. Companies have untapped knowledge within their workforce that is dormant or siloed to individual staff or departments.
With the proper management structures, this knowledge can be found, stored, and made accessible to the wider workforce, offering tangible business benefits. We'll cover what a knowledge economy is and how to develop a knowledge-based strategy to help you better utilize your workforce and gather new insight from your existing company performance.
What is Knowledge Economy?
The knowledge economy is a system of consumption and production based on intellectual capital. The knowledge economy typically represents a large component of all economic activity in developed countries.
It was coined in the 1960s to describe a shift from traditional economies to ones where the production and use of knowledge are paramount. Academic institutions and companies engaging in research and development are important foundations of such a system. And so are those who apply this knowledge, the programmers developing new software and search engines to utilize data, and the health workers who use data to improve treatments.
Knowledge management is capturing, storing, sharing, and effectively managing the knowledge and experience of employees to increase the workforce's overall knowledge. Its primary goal is to improve efficiency and productivity and retain critical information within the company. With all this knowledge and expertise, employees are empowered to improve their decision-making ability.
Examples of the Knowledge Economy
- Information Technology - Creating and operating systems that automate things and applications that people use. For example, a software developer who creates tools for organizing and exploring data.
- Business Processes - Analysis and improvement of business processes. For example, a manufacturing manager who uses management accounting to discover improvements to efficiency and quality on a production line.
- Education - The knowledge economy is based on an educated workforce; learning is a lifelong process. This represents a shift in education from systems that encourage memorization and conformity to education based on discovery, problem-solving, and design.
- Culture - Culture-related industries include art, performance, architecture, history, and cuisine. For example, an expert in the history of an area is involved in developing the region's tourism industry. Culture is a vibrant area of the knowledge economy because there is little interest in automating human pursuits such as art and fine cuisine.
- Marketing - Marketing includes promotion, product development, distribution, and sales. For example, a creative individual designs advertisements to engage and inspire customers.
What is Knowledge Management?
Knowledge management is any developed system that assists people in a business or organization to create, distribute, access, and updating knowledge and information related to the business and its responsibilities. Some types of knowledge management systems are:
Knowledge management can be separated into three main areas:
- Accumulating knowledge
- Storing knowledge
- Sharing knowledge
By accumulating and storing the staff's knowledge, companies hold onto what has made them successful in the past. In addition, sharing this information throughout the organization informs staff of past approaches that improve performance or better inform new strategies.
To achieve the goal of change management, companies have to enable and promote a culture of learning and development, creating an environment where employees are encouraged to share information to better the collective workforce.
Examples of knowledge management
Here are some examples of knowledge-based management used in practice.
Employees' knowledge and skillset grow as they spend time with a knowledge-based organization. As a result, staff typically retire with a wealth of expertise that the company needs to mine using efficient knowledge management processes to reduce disruption and prevent workforce knowledge gaps.
This means identifying and capturing the meaningful information that needs to be retained by the organization and determining the best approach for storing and distribution.
Employee transfer or promotion
When staff change positions within a company, they must develop additional skillsets and expertise to match their new role. Efficient knowledge management procedures simplify delivering this information to create a seamless transition from one position to another.
Why is knowledge management important?
Knowledge management is important because it boosts the efficiency of an organization's decision-making ability. By ensuring all employees have access to the overall expertise held within the organization, a smarter workforce is built that is more able to make quick, informed decisions, benefiting the entire company.
Knowledge management allows innovation to grow within the organization; customers benefit from increased access to best practices and reduced employee turnover. The importance of knowledge management is growing every year. As the marketplace becomes ever more competitive, one of the best ways to stay ahead of the curve is to build your organization intelligently and flexibly. You must be able to spot issues from a distance and respond quickly to new information and innovations.
Companies begin the knowledge management process for many different reasons.
- A merger or acquisition could spur the need for codifying knowledge and encouraging teams to share their expertise.
- The imminent retirement of key employees could demonstrate the need to capture their knowledge.
- An upcoming recruitment drive shows the wisdom in using knowledge management to train new employees.
52% of Deloitte's 2021 Global Human Capital Trends Survey respondents stated workforce movement as the driving force behind proactively developing knowledge management strategies.
Whatever the reason is, implementing knowledge management processes offers tangible benefits that drive value. This is backed up by research showing knowledge management positively influences dynamic capabilities and organizational performance.
Benefits of knowledge management
A survey of over 286 people working in knowledge management across a range of industries, locations, and company sizes found the most significant benefits to be:
- Reduced time to find information
- Reduced time for new staff to become competent
- Reduced operational costs
- Improved customer satisfaction
- Improved bid win/loss ratio
Making knowledge management a significant part of a company's leadership approach produces a more streamlined workforce with faster onboarding and well-informed staff that provide a better experience for customers.
Knowledge management is critical for any company that wants to increase its bottom line and market share. IDC estimates that Fortune 500 companies lose $31 billion from not sharing knowledge within their organization yearly. Studies estimate that improving employee access to information and tools could save organizations roughly $2 million monthly for every 4000 employees.
Ways to Implement Knowledge Management
Depending on what the company needs, its knowledge management will look different.
Below we have listed common examples of knowledge management methods in action:
Tutoring & training, communities of practice, and Q&A
These examples involve transferring information directly from the knowledge holder to other employees. This could be through in-person tutoring, company-wide training sessions, online chats, and group discussions - or a mix of these options and others.
Many companies value building a skills matrix that maps each employee's expertise. This simplifies finding the employee with the most experience or knowledge in a given field. In addition, it identifies knowledge gaps within the workforce and shows areas requiring focus for specific knowledge management methods and training.
Some examples of this type of knowledge management may not require a formalized structure. For example, perhaps your company is having problems with a new project, which reminds you of a previous situation. Using the company Slack, for example, you can search for similar questions and find old threads discussing how you overcame the problem last time. Prior expertise you may not have thought about in years is stored and discovered in old
communications to help you.
Documentations, guides, guidelines, FAQ, and tutorials
Written communications are great for storing and transferring knowledge. With text-based knowledge management, a system to store, categorize and navigate subjects is always available. In many cases, metadata is a great help for this.
Forums, intranets, and collaboration environments
These online resources spark conversation and bring many knowledge holders into the same place. Threads, subforums, and groups can be divided by topic, level of expertise, or other classifications.
Learning and development environments
Creating an environment where learning is considered an asset will continuously drive employees to educate themselves. Incentivizing them to take advantage of your knowledge management systems will result in upskilled employees ready to take on leadership roles in your organization. For this to happen, there must be structured and accessible learning and development technology in place that employees can use.
These in-depth studies into particular areas serve as complete guides to a subject. The actions taken, the results they produce, and any lessons learned are extremely valuable.
These online seminars can be beneficial in widely disseminating ideas throughout teams, branches, or the entire company.
Coping with change in the knowledge economy
The knowledge economy relies primarily on producing, distributing, and using information and ideas rather than physical or mechanical abilities. Many jobs across industries are part of the knowledge economy. These range from academic researchers to programmers to software developers to health workers doing research and data analysis. All of these jobs require applying knowledge to serve others in some way.
In this economy, the knowledge of its workforce is the greatest value a company has. And with today's ever-changing technologies, employees must constantly stay on top of the latest information and skills.
People are developing and upgrading their skill sets to survive in the fast-paced knowledge economy. By knowing what skills are most crucial to the knowledge economy and then acquiring those skills through certificate programs and other means, you can impress your employer or impress any hiring manager if you are on the job market. Business owners can help develop their employee's skill sets through knowledge accumulation and a more diverse talent pool within their organization.
When it comes to huge amounts of data, processes get bottlenecked easily. For example, if there is no centralized and easily searchable knowledge database, valuable information might not reach those who need it.
If you can't share a new significant piece of information promptly across the company, sales reps and their colleagues will be the ones to lag and could mislead potential clients.
At the same time, if employees lack the knowledge of specific steps in a knowledge-sharing process or disregard the requirements for data accumulation, even the best knowledge database can provide confusing results that misguide salespeople and harm sales overall.
Tips for Fostering Knowledge Accumulation
To make knowledge accumulation efficient and beneficial to all departments, I recommend following these steps:
Arrange A Single Knowledge Access Point
This can serve as the "brain" of an organization where you store and organize all valuable knowledge. All employees involved in knowledge accumulation should have access to it at any given moment and serve as a single point of truth. You may consider enrolling in enterprise resource management software (ERPs), intranets, document management systems (DMS), or specially designed data repositories.
Hire Qualified Knowledge Managers
Some businesses choose to hire external consultants when necessary, but it is important to have an in-house team that will gather, store, manipulate, classifies, and retrieve information continuously.
Small firms may want to appoint a data officer or a knowledge master. Larger companies may require a full-fledged knowledge management department. Knowledge specialists can oversee information flows and help employees expertly navigate seas of tools, folders, and data. Additionally, they should be responsible for keeping information indexed, searchable, complete, and updated.
Keep The Processes Transparent And Organized
No matter how great the knowledge team is, all employees should participate in knowledge accumulation. This is impossible to facilitate if you don't establish internal guidelines.
You can frame these guidelines around the following steps:
• Making data accumulation processes identical for everyone.
• Educating employees on using the right search criteria and techniques.
• Promoting a practice of sharing new information within and between departments.
• Introducing methods of knowledge revision and retention.
• Tracking changes to the documented knowledge.
• Gathering employee feedback on the missing information and filling these gaps.
Foster A Data-Driven Culture
Accumulated knowledge is useless if you don't apply it to make informed decisions. Everyone in your company, from top-tier executives to interns, should know how to interact with data and use it in their daily routines.
Your employees should:
• Have a single hub with continuously aggregated data from different sources.
• Have role-based access to relevant data.
• Be "data-literate," or able to "read" different data types from various departments, whether it's statistics or visualizations.
• Make proper decisions based on several data sources, not just gut feelings.
When you have a knowledge management system and need to process massive data records and provide analytics, you may consider automating some tasks, like capturing data from different sources or preparing reports. You can do this through your customer relationship management (CRM) platform, DMS, or other specialized data delivery tools.
Wrapping It Up
The key function of knowledge management is to help executives use it for employee development. In this context, training is becoming the forefront of success in organizations worldwide. The more training, the better the return on investment to shareholders. Learning is a process that leads to acquiring new insights and knowledge and potentially correcting sub-optimal or ineffective actions and behaviors that cause companies to spiral out of control.
If you need help with incorporating better training and data into your organization, Universal Creative Solutions offer operations consulting to help your employees improve their skillsets and help your company capture key insight to help grow your business. Schedule a free consultation call with us to learn more.