We live in a knowledge economy, making knowledge one of the modern company’s most important assets.
How important? Consider these statistics:
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.
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:
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.
“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.
Effective knowledge management reduces operational costs and improves productivity because it provides seven key benefits:
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.