The Benefits of Knowledge Management in Business

Consumer packaged goods company Conagra reduced the time their employees spend looking for information and prioritized data-driven decision-making by adopting a centralized knowledge management system for their market research and insights. 

Mortgage lender company PennyMac implemented a knowledge management platform to ensure their customer service agents could quickly access the information they needed to assist homebuyers and deliver exceptional customer experiences.

The above companies recognized the benefits of knowledge management and used it to address challenges caused by lack of access to information, thereby streamlining their operations and improving productivity across the organization.

If your organization doesn’t have a knowledge management system in place, you’re likely losing valuable knowledge and missing opportunities to improve efficiencies and deliver better customer experiences.

But before you start looking for a new knowledge management system, it’s important to understand the basics. Below, we’ll dive into the definition of knowledge management, what knowledge assets are, and how a good knowledge management system can benefit your business.

What Is Knowledge Management?

According to Tom Davenport, “knowledge management is the process of capturing, distributing, and effectively using knowledge.”

In other words, knowledge management is the practice of creating structured access to abundant information, deploying that information across the company, and encouraging open communication.

The major goals of knowledge management are to boost an organization’s efficiency, prevent loss of knowledge, and raise the collective IQ of the company.

Before you start implementing knowledge management in your company, you need a strategy. A knowledge management strategy is a detailed plan to help your company collect, store, and distribute information for the benefit of your organization and employees. Creating an effective knowledge management strategy will:

• Centralize and democratize your company’s knowledge, making it easier to access.

• Allow your employees to easily search for the information they want. 

• Enable your employees to easily absorb and build on their organization’s collective knowledge (e.g., ask questions, add comments, share their expertise).

What Are Knowledge Assets?

Every organization collects a substantial amount of knowledge, and when that knowledge is collated and stored, it becomes an asset. 

Knowledge assets, also known as intellectual capital, are the accumulated resources of your organization. It is the information owned by your organization and employees in the form of databases, content, guides, policies, and procedures.

Knowledge management involves incorporating and leveraging the knowledge assets of an organization, which includes the expertise of its staff, to meet the objectives of the institution.

Knowledge assets can be broken down into four categories:

Experiential knowledge assets

These are knowledge assets that are attained through the joint, direct involvement of the members of the organization. Another name for this is tacit knowledge, or the knowledge that is gained through personal experience and context. For example, employees might gain tacit knowledge by shadowing a more experienced coworker or asking questions of a subject matter expert.

Routine knowledge assets

Routine knowledge assets are the kinds of assets that have become embedded in the actions and processes of the company.  They are another type of tacit knowledge. Examples include knowledge around company culture or the best ways to perform everyday tasks.

Conceptual knowledge assets

These are more definitive and are based on the judgment of customers and employees. Examples include brand designs, customer data such as customer profiles, market research, or customer insights reports (based on the organization’s primary research or purchased secondary research).

Systemic knowledge assets

Like conceptual knowledge assets, systemic assets are definitive and explicit. This is the knowledge that is systemized and categorized. They include company policies, procedures, and process documentation: standard documentation that employees across the organization need to be familiar with to do their jobs well.

Contrary to experiential knowledge assets, systemic knowledge assets are the easiest type to put into writing and can be disseminated fairly easily.

Having all of these categories of knowledge assets in your company comes with a lot of benefits, which we’ll explore below.

What Are the Key Benefits of Knowledge Management?

According to Deloitte, 75% of surveyed organizations say creating and preserving knowledge across evolving workforces is important or very important to their success over the next 12–18 months.

Implementing an effective knowledge management strategy can lead to several positive outcomes for businesses and organizations of all sizes. These benefits include: 

Faster access to knowledge and information

Imagine a scenario where you hire a new Director of Customer Service, and the new leader struggles to find their footing in the department. One thing that will help here is if that new employee has speedy access to the knowledge of the previous department leader, which can be achieved if the company has a centralized knowledge system. With a good knowledge management system, both new hires and tenured employees know exactly where to go to find information.

Improved efficiency

An efficient employee is one whose entire work process is streamlined. This means that they don’t waste time and energy if they can help it. When your employees spend less time searching for information, they have more time to spend on impactful activities.

Informed decision-making

Informed decisions are the best decisions. And with knowledge management, the decision-makers in your business can make better decisions because they have a holistic view of the data and insights that exist across the organization.

Enhanced customer service

A customer asks a question about a product, and a customer-facing employee accesses their company’s knowledge base and quickly pulls up the information that the customer needs.

This sounds like a positive customer experience, right? Knowledge management enables your employees to deliver timely, consistent information and solutions to customers.

Cost savings

One of the core benefits of knowledge management is the money it saves. Savings can come from reducing the time employees spend searching for information, reducing the number of systems needed to store knowledge, eliminating errors caused by lack of information, and eliminating duplicated work or research.

Increased employee engagement

While building a knowledge base for your business, employees get to have a say. It is their experience, their “know-how,” and their skills that create the knowledge base. When employees share their input and insights, they feel more engaged and satisfied in their work. This is a win-win for businesses and employees.

Innovation and growth

Establishing a culture of knowledge sharing makes employees feel empowered to contribute to their organization’s knowledge management platform, growing the organization’s collective intelligence. This opens up new opportunities for innovation and growth.

Better customer experiences

When you give your employees the resources they need to share reliable, detailed, and current knowledge, they’re better equipped to provide remarkable experiences to your customers.

Imagine getting a call where the customer asks to be talked through a process. Then the customer service agent proceeds to put the caller on hold for 20 minutes only to get back on the line and say, “We’ll have to get back to you.”

An experience like this could cause you to lose that customer forever.

Customer experience experience expert Jeanne Bliss suggests asking yourself, “Do your customers feel that you know them?” Or when they reach out for support, do they keep getting told to “hold on” or passed from one representative to another who asks—yet again—for their information? Not having crucial knowledge instantly accessible to employees leaves customers wondering if you value them at all. On the other hand, when employees can quickly provide the assistance that customer need, customers are more likely to trust the brand and remain loyal.

Getting Started With Knowledge Management

To enjoy the above benefits and properly organize your company’s knowledge management, you need to conduct a knowledge audit first.

Conducting a knowledge audit involves taking inventory of the knowledge your organization has and the ways you are capturing, organizing, and preserving it. It’s also an opportunity to investigate the strengths and weaknesses of the information and what it is used for. Understanding all the elements involved in a knowledge audit can enable you to gauge and effectively navigate any roadblocks along the way.

Evaluating your company’s existing knowledge management capabilities will help you determine the actions you will need to take to develop a successful knowledge management strategy in your organization. 

Remember, knowledge only becomes valuable when you put it into practice.