Why invest in Knowledge Management?

Industrial companies have, over time, become very efficient in terms of turning raw materials into finished products. They have optimised their processes and machines in order to improve ‘production efficiency’.

Knowledge based companies on the other hand, are at the very beginning of considering ‘knowledge efficiency’ as a quantifiable target to reach. The reality is that most of the knowledge based work done today is very inefficient.

For example, it is common to allow knowledge workers to spend 4 hours searching for, requesting and compiling information, before they can spend the 1 hour they need to actually use the information. In terms of efficiency the knowledge worker is only adding value to the company 20% of the time, and spending the rest of the time essentially doing ‘non-brain’ activities. A lot of time is also wasted in trying to track and react to process problems that could have easily been automated (Eg. Order requests, employee changes, inventories, etc.). In these administrative areas the value being added by the manual work is close to 0%.

Just as industrial companies compete on the basis of production efficiency, knowledge based companies will differentiate themselves by how well they manage their knowledge.

Here are some of the key reasons why it is worth investing in Knowledge Management:

• Adding value to your organisation. Your company makes money because of the value that is added by knowledge workers. The more effectively they can work (ie. Having better access to information, improving the quality of information, and turning information into knowledge faster) the more value the company has.
  
• Most knowledge work performed today is done inefficiently. This means you are paying a lot for workers who don’t have the systems to work efficiently. Companies typically have 80% of the infrastructure they need, but fail to capitalise on the remaining 20% that makes all the difference. By providing the right tools you can increase the utilisation of knowledge workers and achieve more for the business.
  
• Knowledge is an asset that needs to be managed like anything else. It costs money to obtain Knowledge and it can be used to produce profit. The better it is managed the more utilisation you receive from it.
  
• Protecting your knowledge assets. Most companies have their Knowledge Assets stored in the minds of their employee’s. This means the company looses some of its knowledge asset every time an employee leaves. Knowledge Management helps to keep the knowledge assets in the company even after people have left.
  
• Transparency and agility. Your entire organisation becomes more transparent and provides better visibility on what is happening. Transparency is critical to helping companies stay agile.
  
• Knowledge Management Efficiency will be the primary distinguishing factor between businesses in the future. Put simply, if you don’t manage your companies knowledge well then someone else will always be able to out perform your business.
  
• It is more motivating for people to do “brain work”. Providing an environment where people can focus on knowledge work will help to keep employees motivated and to attract the best talent.
  
• Raw business speed. Superior Knowledge Management will help to speed up the entire corporation, while poor access to information and knowledge will always slow it down. Your Knowledge Management infrastructure will determine if your knowledge workers drive a Ferrari or a Tractor while chasing new customers and markets.
  
• It will be hard to become efficient later. Knowledge management requires continuous effort and investment in order to produce the right infrastructure and correct mind-set within the company. It’s not possible to change a companies working culture overnight, so if you fall too far behind it will be harder to catch up later.