Knowledge management is a set of activities and processes aimed at creating value through generating and applying intellectual capital. Carla O’Dell and Jackson Grayson define knowledge management as a “conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance”. Executives direct practices that create value from intangible organizational resources. For executives, it is clear that the objective of managing knowledge is to add value to organizations. The focus this article is that executives consider the fact a firm’s knowledge is positively associated with its outcomes.
The importance of Knowledge Management for companies
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.
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.
Bayyavarapu, H.B. (2005). Knowledge management strategies and firm performance (Doctoral Dissertation), The University of Western Ontario, Canada.
Lau, A., & Tsui, E. (2009). Knowledge management perspective on e-learning effectiveness. Knowledge-Based Systems, 22(4), 324-325.
O’Dell C., & Grayson C.J. (1998). If only we knew what we know: identification and transfer of international best practices, New York: Free Press.
Mostafa Sayyadi is a Senior Management Consultant and Former Leadership Team Member of San Diego-based The Change Leader Consulting Inc. He is an| Associate Fellow of the Australian Institute of Management, a Book Author and Business and Technology Journalist.