Why Knowledge Management Is Important To The Success Of Your Company

August 22, 2012

Managers are bombarded with an almost constant stream of data every day. According to David Derbyshire, “Scientists have worked out exactly how much data is sent to a typical person in the course of a year – the equivalent of every person in the world reading 174 newspapers every single day” (Derbyshire, 2011, p. 1).

This overload of data is making knowledge management increasingly more important. Three key reasons why actively managing knowledge is important to a company’s success are: 1.) Facilitates decision-making capabilities, 2.) Builds learning organizations by making learning routine, and, 3.) Stimulates cultural change and innovation.

Facilitates Decision-Making Capabilities

Data can offer managers a wealth of information but processing overwhelming amounts can get in the way of achieving high-quality decisions. GE’s Corporate Executive Council (CEC) is an example of how one company put a knowledge management system in place to help executives cut through the noise, share information, and improve their decision-making. The CEC is composed of the heads of GE’s fourteen major businesses and the two-day sessions are forums for sharing best practices, accelerating progress, and discussing successes, failures, and experiences (Garvin, 2000, p. 195). While information overload or needing knowledge from people in other parts of the company for decision-making can handicap managers, putting in place knowledge management systems can facilitate better, more informed decisions.

Builds Learning Organizations by Making Learning Routine

In his book, Learning in Action: A Guide to Putting the Learning Organization to Work, author David Garvin (2000) notes, “To move ahead, one must often first look behind” (p. 106). The U.S. Army’s After Action Reviews (AARs) are an example of a knowledge management system that has helped build the Army into a learning organization by making learning routine. This has created a culture where everyone continuously assesses themselves, their units, and their organization, looking for ways to improve. After every important activity or event, Army teams review assignments, identify successes and failures, and seek ways to perform better the next time (Garvin, 2000, p. 106). This approach to capturing learning from experience builds knowledge that can then be used to streamline operations and improve processes.

Stimulates Cultural Change and Innovation

Actively managing organizational knowledge can also stimulate cultural change and innovation by encouraging the free flow of ideas. For example, GE’s Change Acceleration Process (CAP) program includes management development, business-unit leadership, and focused workshops. CAP was created to not only “convey the latest knowledge to up-and-coming managers” but also “open up dialogue, instill corporate values, and stimulate cultural change” (Garvin, 2000, p. 125). In this complex, global business environment, these types of knowledge management programs can help managers embrace change and encourage ideas and insight, which often lead to innovation, even for local mom and pop business owners.

Bottom Line

Fortune 500 companies lose roughly “$31.5 billion a year by failing to share knowledge” (Babcock, 2004, p. 46), a very scary figure in this global economy filled with turbulence and change. Actively managing knowledge can help companies increase their chances of success by facilitating decision-making, building learning environments by making learning routine, and stimulating cultural change and innovation. By proactively implementing knowledge management systems, companies can re-write the old saying, “Change is inevitable, growth is optional” to “Change is inevitable, growth is intentional.”

~ Lisa Quast

Speak up! Join me on Twitter and Facebook


Photo credit: Microsoft Free Clip Art

Bookmark and Share

2 responses to “Why Knowledge Management Is Important To The Success Of Your Company”

  1. Scott Muff says:

    Hi Lisa,
    I just read “Why Knowledge Management Is Important To The Success Of Your Company,” and was intrigued by your point managing organizational knowledge can also stimulate cultural change and innovation by encouraging the free flow of ideas.

    Because of your recent coverage on careers, I thought you might be interested in some statistics about how different education levels affect income and employment. There are three that show the career incentives for higher education and four from a Bellevue University study that show that work is a major obstacle to those who would like to pursue higher education.
    • The unemployment rate for Americans who have never attended college is double what it is for those who have.
    • Four-year-degree holders earn 54% more, on average, than those who attended college but didn’t finish.
    • Nearly half of all new jobs in the U.S. over the next ten years will require more education than just a high school diploma.
    • The economy has nearly half of the country (47% of Americans) re-evaluating their career paths.
    • With work and family commitments, 35% of Americans say they don’t have time to get everything done and go to school.
    • 9% of Americans don’t feel they can afford to take time away from work to go to school part-time or full-time.
    • 12% say their work schedule makes it impossible to regularly attend scheduled classes.

    This would be great for a quick list blog since you have one of the magic list numbers (7). Or, you could highlight the catch-22 of work getting in the way of tools for career advancement and give advice on how to resolve it. I could recommend some experts in this area if you’d like.
    There is a great article by Dr. Mary Hawkins entitled “7 Strategies for Getting a Degree While Working” here: http://www.makeithappennow.org/advice/7-strategies-for-getting-a-degree-while-working/ . I encourage you to explore that site in general for blog ideas and research material. It’s a good resource to keep handy.
    Again, I really enjoyed your blog. Let me know if I can help you with anything in the future.
    Scott Muff

  2. Kavitha says:

    Super-like the article on KM 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *