Knowledge management as a key success factor

In a highly competitive environment, continuous value creation is a necessary condition for long-term success of companies, which must therefore feed it while updating their strategy. This value creation takes place through various means, including the effective knowledge management that flows through organizations.

Understanding markets, professional contexts, employees experience and skills, internal processes and companies strategies are all sources of knowledge which, when properly leveraged, enable the organization as a whole to optimize its activities. Over time, knowledge management has become one of the most important asset of successful companies. The way in which this discipline was implemented has evolved widely, reaching certain limits and new types of applications on a large scale.

Knowledge has always been an integral part of corporate strategies, especially since the 1950s with the emergence of the production economy and mass consumption. At that time, knowledge was extremely rationalized in order to increase productivity based on a highly centralized company organized with a high work division and repetitive operations optimized as much as possible. The emergence of Fordism and Taylorism made possible to respond effectively to a growing consumer demand and thus contribute to significant economic growth.

In 1975, at the time of the first oil crisis which restored the balance between supply and demand, differentiation became strategic. The quality economy emerged and coordination became decentralized, to the point of becoming horizontal within organizations.

In the 1990s, widespread uncertainty about demand forced companies to review their strategy. Product lifetimes were shortened to support production, and innovation was then a key success factor. Innovation is therefore integrated into organizations and developed by engineers to understand, anticipate and shape market trends. This period was characterized by the employment of people active in knowledge management, in the intensification of the use of resources dedicated to knowledge enrichment and the development of ICT technologies. This was the birth of the knowledge economy.

According to the French ICT club of large companies (Cigref), knowledge management is defined as "a set of organizational modes and technologies aimed at creating, collecting, storing and disseminating, using and transferring knowledge in the company. This knowledge is materialized by internal and external documents, but also in the form of intellectual capital and experience held by employees or experts in the field". Following to this definition, we can identify 3 main steps in the knowledge management process:

1. Knowledge creation and collection

Knowledge creation takes place when new information is discovered both inside and outside the company, thus generating new knowledge. In order to achieve this, companies can make their database and specific templates available to employees, allowing them to access and complete this information continuously, thus enriching the knowledge available to the entire company. In the knowledge capture phase, different means exist depending on the type of knowledge considered:

  • Explicit knowledge, which corresponds to codified knowledge, easily explained and integrated by individuals, can be easily stored in documents, reports, etc.

  • Tacit knowledge, which is defined as knowledge that is inherent to the individual, difficult to explain and transfer, innate or acquired through experience. This type of knowledge is more complex to share and can nevertheless be shared through training, conferences or brainstorming sessions. It can then be used to modify procedures and translate it into explicit knowledge.

2. Organizing and sharing knowledge

When knowledge is acquired, collected, stored and made accessible and we can then inform the actors for whom it would be most useful. This involves the creation of a knowledge base, ideally organized into categories, sub-categories, according to the themes addressed and expertise considered. This is followed by dissemination among individuals, groups of individuals, individuals with explicit sources or a group to the organization.

3. Application and transfer of knowledge

This is where companies have the opportunity to develop their competitive advantage. Indeed, knowledge in itself is of no use if it is not properly exploited, which makes application extremely important. This stage also generates a loop effect as the results of using knowledge can produce new experiences, new information, which can then be used to readjust the organization. This information therefore constitutes knowledge, which will be re-injected into the management process put in place.

The implementation of these operations brings many benefits to companies such as:

  • Facilitation of access to data and knowledge, which thus makes possible to avoid recurring errors, to explore identified opportunities and then guarantee efficiency, particularly at the level of production units or business procedures.

  • Better decision making by requesting information or knowledge related to opinions and experiences from the entire organization on a given topic when necessary.

  • Promotion of innovation and continuous improvement through the exchange of ideas, proposing initiatives based on what is known. These exchanges also make possible for everyone to take the practices from each other and collectively improve the quality of work.

  • Increase customer satisfaction through the continuous search for added value and an increased responsiveness to market trends.

  • Improvement of employee satisfaction through listening, communication, training and consultation while deploying a range of tools allowing them to access all the resources available to the company to react to any situation in the best possible way.

Nevertheless, knowledge management models also have their limitations. Indeed, what creates value is not the volume of knowledge but its quality. The most valuable knowledge is most often found in the heads of the people who perform best in the tasks that occupy them, or who are the most talented. The problem is that the propensity to make this knowledge available is likely to be low, given the time and free nature of this process, which has allowed them to be successful to some extent. The knowledge itself will then have to be effectively exploited by employees, whereas research can be daunting when the volumes of knowledge are too large.

The answer is therefore in the formulation of the problem: encouraging the formulation and explanation of knowledge, continuously purifying this information without allowing it to accumulate, whereas yesterday's knowledge may turn out to be has-been compared to today's or tomorrow's knowledge. Technology is therefore a facilitator of knowledge management if organizations encourage the brains to pool and constitute a collective intelligence in a creative environment, without a loud and counterproductive process.

Plato once said: “Human behavior flows from three main sources: emotion, desire and knowledge”. Exactly like emotion and desire, knowledge has its limits and organizations have to continuously adapt themselves to face it.

Nevertheless, the personalization of knowledge management based on available resources and companies’ strategies leaves room for fantastic opportunities in collaborative, technological and competitive terms. In a vulnerable, uncertain, complex and ambiguous world, we might see these opportunities as key success factors.

Raphaël Castermans

AION Consulting


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