Management Research Library
Knowledge Management - Why Important?
Why is Knowledge Management Important in Today’s Business Climate?
Today’s business environment is characterized by continuous, often radical change.
Such a volatile climate demands a new attitude and approach within organizations—actions must be anticipatory, adaptive, and based on a faster cycle of knowledge creation.
Some of the current challenges businesses face include:
• a growing emphasis on creating customer value and improving customer service;
• an increasingly competitive marketplace with a rising rate of innovation;
• reduced cycle times and shortened product development times;
• a need for organizational adaptation because of changing business rules and assumptions;
• a requirement to operate with a shrinking number of assets (people, inventory, and facilities);
• a reduction in the amount of time employees are given to acquire new knowledge; and
• changes in strategic directions and workforce mobility that lead to knowledge loss.
New products and innovations are increasing at a faster rate than ever before, along with evolutions in customer preference and need.
Managers must no longer investigate their customers superficially; they must dig more deeply than surveys and feedback forms.
As organizations have become more complex and information more readily accessible, forward thinking managers have grown concerned with how to allow knowledge to flow freely and how to control and manage this vital flow of information and technology at the same time.
All of these factors make knowledge management a necessity rather than a luxury. Organizations must have a clear handle on how knowledge is discovered, created, dispersed, and put to use.
In some ways, knowledge management is more essential to agency success than capital or labor, yet often it is the most overlooked.
The supply chain, for example, relies upon knowledge from diverse areas including planning, manufacturing, warehousing, and distribution.
Today’s volatile business environment demands a new attitude and approach within organizations—actions must be anticipatory, adaptive, and based on a faster cycle of knowledge creation.
Knowledge Management: Human Potential
Knowledge management is so important to public sector organizations in part because of the prospective loss of employees due to an aging workforce.
A recent GAO report indicated that a substantial portion of the federal workforce would become eligible to retire or will retire over the next five to 10 years, and that workforce planning is critical to ensure that agencies have sufficient and appropriate staff to account for these retirements.
In addition, high staff turnover, lack of adequate training, and a tendency to maintain the status quo, further impact and impede the success of knowledge retention and growth.
Oftentimes, when people leave an organization, they take a wealth of knowledge about their jobs with them.
Knowledge management attempts to secure and replenish the learning experiences, as well as the work products, of the individuals who comprise an organization.
The Benefits of Knowledge Management
Whether to minimize loss and risk, improve organizational efficiency, or embrace innovation, knowledge management efforts and initiatives add great value to an organization.
Some of the benefits of KM include:
• facilitates better, more informed decisions;
• contributes to the intellectual capital of an organization;
• encourages the free flow of ideas which leads to insight and innovation;
• eliminates redundant processes, streamlines operations, and enhances employee retention rates;
• improves customer service and efficiency; and
• leads to greater productivity.