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Defining Knowledge Management
Knowledge Management magazine Editor at Large, Steve Bath, establishes a working definition of KM for the CRM community.
Posted Jul 4, 2000
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There is no standard definition of knowledge management or KM. Put ten KM "experts" in a room and you are likely to get 30 definitions. Knowledge management is such a preposterous, pretentious and profoundly oxymoronic phrase that everyone who really understands KM--including many of the field's pioneers--refuses to use the term. If there is anything that those experts do agree on, it is that knowledge management is not about managing people in any traditional sense. Nor is knowledge management really about managing knowledge. They prefer terms such as knowledge-sharing, information systems, organizational learning, intellectual asset management, performance enhancement or gardening.

Let's use this definition to get started: "Knowledge management is the practice of harnessing and exploiting intellectual capital to gain competitive advantage and customer commitment through efficiency, innovation and faster and more effective decision-making."

It's All You Know
Ultimately knowledge management is really just a way of looking at the world of business. It's a realization that who and what you know are assets of the organization. And just like the factory you build, the machines you fill it with, the people who operate them, the inventory they build and the cash you put in the bank, your knowledge assets need to be managed for the greatest possible return on investment.

What do these knowledge assets include? start with transaction data on all of your processes, projects, customers and vendors. Add to that all of the research logs, patents, trademarks, marketing strategies and business plans. Competitive insights accumulated by every employee daily, and the competitive intelligence available through the Internet and other information sources also contribute to this accumulation of knowledge. Then add in the knowledge contained in every e-mail, every Word document, every spreadsheet and every fax that zaps its way through your electronic infrastructure.

Yet these things still account for only a fraction of the real value of your knowledge assets. Most--as much as 90 percent, by some estimations--of the real value of intellectual capital is in the heads of your knowledge workers: their skills, experience, hard-won insight and intuition, and the trust they have invested and earned in relationships inside and outside of the organization. This knowledge is even harder to evaluate, share and leverage.

None of the amazing technology that makes knowledge-sharing possible works without addressing the anthropology of corporate cultures. You can spend tens of millions of dollars on tools to enable collaboration, data warehousing, data mining, document management and Internet searches, but if only the month's top salesman gets a bonus, nobody is going to share what they learn.

To understand something about knowledge management you have to understand knowledge. Knowledge is not the same thing as information, which is not the same thing as data. But it's silly to pretend KM does not involve the manipulation of all three. You often see a hierarchy that looks like this: Data becomes information when it's organized; information becomes knowledge when it's placed in actionable context.

When you get to the level of knowledge, it's important to distinguish between explicit and tacit knowledge. In the broadest terms, that's the difference between the knowledge that can be written down and the knowledge that cannot. Explicit knowledge can be processed by information systems; codified or recorded, archived and protected by the organization. Tacit knowledge exists in people's heads. Tacit knowledge is extremely difficult to transfer; explicit knowledge is easier.

Valuing Knowledge
Knowledge is not the same thing as a knowledge worker. And just as there is a difference between the knowledge that exists in a KM system and knowledge that exists in the mind of the knowledge worker, there is also a difference between the kind of knowledge that exists in the mind of the knowledge worker and that which exists within a community of knowledge workers.

This distinction makes it easier to account for knowledge assets. A knowledge worker is an asset that appreciates over time. Knowledge itself is more often a depreciating asset. Patents, for example, quickly lose their value if not productized or licensed quickly. A sales lead becomes worthless if the contact chooses a competitor's product or leaves the customer's company for another job. Unlike other resources, however, knowledge is not subject to the law of diminishing returns; it is not depleted through use.

The distinction between tacit and explicit knowledge also determines who owns the knowledge. Explicit knowledge is most likely the property of the firm. One way or another it is either data or work product. But since tacit knowledge cannot be codified, it effectively remains the property of the knowledge worker. Companies have certainly tried to own this knowledge. While they are employed by the company, knowledge workers are ethically--and sometimes contractually--prohibited from sharing their knowledge with competitors. But if the knowledge worker leaves the firm, they'd take that knowledge and its inherent value with them.

In the final analysis, it matters less how you define knowledge management than how you practice it. It means nothing if you don't take knowledge and turn it into customer value.

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To contact the editors, please email editor@destinationCRM.com
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