04 Feb

The Value of Effective Knowledge Management

Leading companies pursue KM to achieve and sustain world-class performance.

For some, the value of KM is unquestionable and long-term. Others make expectations explicit and quantify achievements.

Depending on which value discipline the enterprise pursues, some examples of expected and realized benefits from KM are:

When pursuing Customer Intimacy:

  • Increased orders and proposal acceptance from having more knowledgeable sales and marketing people — by transferring mental models and perspectives that exceptional performers use to all practitioners.
  • Higher customer satisfaction leading to greater customer loyalty, less sales and marketing cost per dollar sold, and greater market penetration by providing better service to customers with individual requirements — made possible by pooling knowledge among team members and having instant access to expert networks.
  • Greater market penetration and profit margins with individualized product specifications and customer service — achieved by obtaining and acting on in-depth knowledge of product use in customer environments and effects on customer profitability and success.

When pursuing Product Leadership:

  • Higher quality products leading to higher value to customers and better market acceptance, with greater profitability and enterprise viability — resulting from better transfer of knowledge from outside sources and new educational programs that provide wider horizons and general understanding in designers and marketing people.
  • More innovative and advanced products that open up new market niches with increased sales to increase net income per share — by fostering personal innovation, increased sharing of knowledge between marketing, manufacturing, and product development, and a new research agenda.

When pursuing Operational Excellence:

  • Less costly products and services result in higher net profit – resulting from increased benchmarking and greater sharing of best practices between different groups and inside and outside the organization.
  • More timely product deliveries, reduced inventories, less rework, and greater customer satisfaction — by increasing craftspeople’s and foremen’s knowledge of their own and adjacent processes.
  • Greater product consistency leading to reduced operating costs — from increased knowledge by all employees of the effects of product variations on customer requirements, sales, and enterprise profitability.
04 Feb

Knowledge Management Strategies

Most enterprises pursue one or more of the following KM strategies:

Knowledge Strategy as Business Strategy Focus:

Emphasize knowledge creation, capture, organization, renewal, sharing, and use in all the enterprise’s plans, operations, and detailed activities for the purpose of having the best possible knowledge available — and used — at each point of action.

Intellectual Asset Management Strategy Focus:

Emphasize enterprise-level management of specific intellectual assets such as patents, technologies, operational and management practices, customer relations, organizational arrangements, and other structural knowledge assets. Management may center on renewing, organizing, valuating, safekeeping, as well as increasing the availability and marketing of these assets.

Personal Knowledge Asset Responsibility Strategy Focus:

Emphasize personal responsibility for knowledge-related investments, innovations, and the competitive state, renewal, effective use, and availability to others of the knowledge assets within each employee’s area of accountability for the purpose of being able to apply the most competitive knowledge to the enterprise’s work.

Knowledge Creation Strategy Focus:

Emphasize organizational learning, basic and applied research and development, and motivation of employees to innovate and capture lessons learned for the purpose of obtaining new and better knowledge that will lead to improved competitiveness.

Knowledge Transfer Strategy Focus:

Emphasize systematic approaches to transfer — obtain, organize, restructure, warehouse or memorize, repackage for deployment, and distribute — knowledge to points of action where it will be used to perform work. Includes knowledge sharing and adopting best practices.

The choice of which KM strategy to pursue is typically based on other strategic thrusts and the value discipline that the enterprise pursues, challenges it faces, and opportunities it wishes to act on.