KNOWLEDGE MANAGEMENT

What Is Knowledge
Management, and
Why Is It Important?
by Jessica Greene

We live in a knowledge economy, making knowledge one of the

modern company’s most important assets.
How important? Consider these statistics:

 It’s estimated that poor knowledge-sharing practices cost Fortune

500 companies $31.5 billion annually.

 74 percent of organizations estimate that effective knowledge

management disciplines increase company productivity by 10-40
percent.
Given the importance of knowledge to efficiency and productivity, it’s
critical that organizations manage their knowledge effectively.
Knowledge management is any system that helps people in an
organization share, access, and update business knowledge and
information.
In this piece, we’ll expand on that definition of knowledge management
with some concrete examples, and then illustrate exactly why
knowledge management is such an important area of focus for
businesses and for employee support teams like IT, HR, and Finance.

Examples of knowledge
management in organizations
Knowledge management comes in many different forms. One great
example of an effective—yet simple—practice comes from Geisinger
Medical Group. After developing checklists for doctors to use when
conducting surgeries, the cost of surgery declined $2,000 per patient,
and patients experienced fewer complications after surgery.
But simple checklists just won’t cut it for the breadth and depth of
knowledge that exists in most organizations. Robust solutions for
knowledge management include:

 Cross-training programs – Mentoring, shadowing, and other

training programs allow employees to gain business knowledge
by watching others work. For example, new employees at
Toyota shadow experienced employees for months, and new
factories are initially staffed by experienced workers from existing
factories as well as new hires.

 Document management systems – Document management

systems like Google Drive and Box allow organizations to store
company documents on the cloud, share them, and control
access permissions at a granular level. Typically, these tools
have systems for tagging files and adding metadata that make
information easier to find.

 Content management systems (CMSs) – Content management

systems like SharePoint and Bloomfire allow teams and
individuals to publish, update, and access information on a
company intranet.

 Social networking tools – Private social networking tools

like Workplace by Facebook and Slack allow teams to
communicate and collaborate in a shared space. But these tools
also double as knowledge management systems because they
store all historical conversations, allowing employees to search
for previously-discussed information.

 Chatbots – We believe chatbots represent the natural evolution

of knowledge management. Chatbots like Spoke use AI and
machine learning to respond to employee questions and requests
for information. Using chatbots, employees don’t have to wonder
who to ask or where to go for information they need. They don’t
have to go digging around in a CMS, document system, or chat
history. They can use pose natural-language questions (“How do
I add a new baby to my insurance?”) and the chatbot will surface
the best information from its knowledge base, regardless of
where that info lives in the organization.
 An example of askSpoke’s chatbot answering an employee’s question.

For more examples of how specific organizations have implemented

knowledge management solutions, check out our piece on knowledge
management practices at Amazon, Microsoft, and Toyota. You can
also access more than 100 knowledge management case studies
on Nick Milton’s blog.

Why is knowledge management

important?
“If HP knew what HP knows, we would be three
times more productive.” – Lewis E. Platt,
former CEO at Hewlett-Packard
The statistics cited in the beginning of this piece established that
knowledge is one of an organization’s most important assets. Yet, as
you’ll see, knowledge is frequently undocumented, difficult to
access, and at risk of disappearing.
The proliferation of different apps used by different teams across
companies means that useful information increasingly lives within silos
within organizations. And that only exacerbates the effects of tribal
knowledge, which is unwritten information that isn’t shared outside of a
team.
Employees quit and retire, taking with them what may amount to
decades of company knowledge. In the results of a survey published in
the book Critical Knowledge Transfer , 53 percent of C-suite
respondents said the knowledge-related costs of losing key employees
falls somewhere between $50K-$299K per employee. Another 11
percent estimated it was more than $1 million. Others couldn’t provide
a figure, saying that the cost was “incalculable” or “priceless.”
Even if they train their replacements before leaving, departing
employees are never able to pass on everything they know because
some knowledge is tacit. We have tacit knowledge and can act on it,
but we don’t necessarily know how to communicate it—and may not
even be aware of it.
Computer hard drives fail and devices get lost or stolen, wiping out any
information stored locally. When storing knowledge in email threads
and on local drives, there’s always the risk of unintentional loss—not to
mention that knowledge stored locally isn’t available to others who
need it.
Knowledge management is important because these situations are
inevitable. Further, 44 percent of employees are either poor or very
poor at transferring knowledge.
All this adds up to knowledge workers spending 30% of their
time looking for or recreating information that already
exists. When knowledge isn’t shared and accessible, employees
waste time recreating solutions, making mistakes people made before,
not getting the insights they need to be productive, and answering the
same questions over and over again.
In short: poor knowledge sharing results in companies running
much less efficiently and productively.
An effective knowledge management system reduces these costs of
inefficiency by making company knowledge more available, accessible,
and accurate. It’s particularly important for businesses today because
teams are much more distributed. When you have multiple branches or
hire remote employees, the need for a system of distributing
knowledge increases exponentially.

The 6 key benefits of knowledge

management in an organization
Effective knowledge management reduces operational costs and
improves productivity because it provides seven key benefits:

1. Spend less time recreating existing knowledge. When

information is easy to access and accurate, it reduces the need
 for coworkers to interrupt each other with emails, chats, and
support tickets. Employees and especially support teams spend
less time answering repetitive questions, freeing them up to focus
on more important—and more profitable—work.
2. Get the information you need sooner (and with fewer
headaches). If you’ve ever sent an email asking for information
only to have that email forwarded multiple times to different
people who might know the answer, you know how unproductive
it is when finding information feels like playing a game of whack-
a-mole.
3. Make fewer mistakes. The old adage “history repeats itself” is as
true in business as it is in all other aspects of life. When
employees aren’t sharing information, they’re doomed to repeat
the same mistakes others have already made. But this is
avoidable when the lessons-learned from mistakes and failures
are easily accessible to everyone.
4. Make informed decisions. When employees share their
experiences, lessons-learned, and research on a searchable
knowledge system, others can access and review that information
in order to consider multiple pieces of data and differing
viewpoints before making decisions.
5. Standardize processes. If you’ve ever played the telephone
game, you know exactly how distorted information gets when
communicated by word-of-mouth and in silos. With documented
and shared processes, it’s easy to make sure that everyone is on
the same page and following approved procedures.
6. Provide better service to employees and customers. Effective
knowledge management allows support teams to resolve
employee and customer requests quickly and correctly.
Employees are able to stay happy and productive, and customers
place more trust in the company, which makes them more likely
to purchase.
Knowing knowledge
management is important isn’t
enough
One of the biggest hurdles when implementing a knowledge
management system is getting employees to embrace it. They may
fear that a new system will take up too much of their time, or that
sharing their knowledge will reduce the value they provide and put their
jobs at risk. Or they might just be reluctant to adopt yet another new
tool or process into their workflows.
So it’s important to form a strategy for not only how the company will
store and share knowledge, but also how you’ll encourage employees
to do the same. To be successful, you should have a goal to create a
company culture that prioritizes knowledge sharing. And it doesn’t hurt
to have a really easy-to-use knowledge management system that fits
into your employees existing workflows.
The goal of a knowledge management program shouldn’t just be to
drive positive business outcomes. It should drive positive outcomes for
your employees, too. When your employees understand the upsides,
your chances of successfully rolling out a knowledge management
program are much higher.

References

https://www.askspoke.com/blog/knowledge-management/knowledge-management-importance/