Why is knowledge management useful?

I have been asked to write this piece by someone who was not entirely familiar with the knowledge management (KM) discipline. Looking back at the work I presented on this site, I can see how a beginner, and particularly a manager new to the subject, might not easily understand why knowledge management is useful for their particular situation. I will keep this concise and to the point. Knowledge management is responsible for understanding:

• What your organization knows.
• Where this knowledge is located, e.g. in the mind of a specific expert, a specific department, in old files, with a specific team, etc.
• In what form this knowledge is stored e.g. the minds of experts, on paper, etc.
• How to best transfer this knowledge to relevant people, so as to be able to take advantage of it or to ensure that it is not lost. E.g. setting up a mentoring relationship between experienced experts and new employees, implementing a document management system to provide access to key explicit knowledge.
• The need to methodically assess the organization's actual know-how vs the organization's needs and to act accordingly, e.g. by hiring or firing, by promoting specific in-house knowledge creation, etc.

So, why is knowledge management useful? It is useful because it places a focus on knowledge as an actual asset, rather than as something intangible. In so doing, it enables the firm to better protect and exploit what it knows, and to improve and focus its knowledge development efforts to match its needs. In other words:

• It helps firms learn from past mistakes and successes.
• It better exploits existing knowledge assets by re-deploying them in areas where the firm stands to gain something, e.g. using knowledge from one department to improve or create a product in another department, modifying knowledge from a past process to create a new solution, etc.
• It promotes a long term focus on developing the right competencies and skills and removing obsolete knowledge.
• It enhances the firm's ability to innovate.
• It enhances the firm's ability to protect its key knowledge and competencies from being lost or copied.

Unfortunately, KM is an area in which companies are often reluctant to invest because it can be expensive to implement properly, and it is extremely difficult to determine a specific ROI. Moreover KM is a concept the definition of which is not universally accepted, and for example within IT one often sees a much shallower, information-oriented approach. Particularly in the early days, this has led to many "KM" failures and these have tarnished the reputation of the subject as a whole. Sadly, even today, probably about one in three blogs that I read on this subject have absolutely nothing to do with the KM that I was taught back in business school. I will discuss this latter issue in greater detail in the future.

Alan Frost