An organization's ability to face challenges - like those brought about by the Internet and other technological innovations - depends not only on delivering products and services and concentrating on core competencies but also on recognizing just what its challenges are. Harnessing knowledge in a structured way can help a company better define its challenges, and a knowledge management, or KM, program supplies this structure.

Academically, knowledge management is perceived as a required discipline for organizations to manage intellectual capital and create an environment that challenges the corporation's creativity. During the last five years, however, many organizations have begun KM programs, with little success.

Initially, the problem was information collection. Though technically feasible, the effort to maintain currency, consistency, and accuracy was too burdensome. Other failures in KM programs were caused by an inability to convert information into knowledge.

KM failed to live up to its original objectives, and its acceptance by businesses slowed.

Technological advances, we believe, make today's environment particularly conducive to knowledge management. Reliance on technology alone would not drive successful KM programs; however, it has contributed to many failed programs.

We suggest there is a practical approach for adopting a KM program, and several organizations are using it.

First, some definitions. Knowledge is the cumulative relevant information about customers, products, services, processes, competitors, and performance. Knowledge management is the ability to identify, access, and transform information into knowledge for the purpose of identifying actions that will lead to improved performance.

KM makes crucial assets available to a business, fostering a creative environment.

To harness knowledge and empower creativity, raw data and information must be assimilated in a way that lets them be transformed through analysis, correlation, and identification and made available to the company for guiding action. This process is knowledge management.

Many organizations in the last year have initiated KM programs, at first focusing on knowledge creation. Specifically, they have targeted components that aid design of new products, service refinement, and operational efficiency. We refer to these components as the knowledge landscape.

The knowledge landscape consists of these items:

  • Internal and external customers.
  • Products and services.
  • Competitors.
  • External markets.
  • Regulatory environment.
  • Industry trends.
  • Process methods and procedures.
  • Employee skills.

The key to knowledge management is understanding how the above components relate to one another. It is the rules and definitions of these relationships that transform information into knowledge.In most cases, companies have no problem conceptualizing KM; it is identifying components of the knowledge landscape and performing and managing the transformations that are troublesome.
Establishing a KM program is not riskless. Having the correct resources, defining how information is transformed, and understanding how the transformation influences the development of knowledge are the keys to successful implementation. Understanding the technologies and other tools companies offer within the KM arena is not to be minimized, but technology is not primary in establishing a program.

And, to repeat, there is a practical implementation approach to delivering results in a quick and concise fashion, minimizing the risks.

Though most organizations will agree about the basics of formulating knowledge, a number of them are reluctant to begin a full KM program without some evidence that it will work in their environment; such cases require a proof-of-concept step. This is similar to an enterprisewide program, but the focus is on a certain niche of the business.

Though the approach does entail some technology components in the short term, the emphasis in the proof of concept is on an initial round of information transformation and the facilitation of knowledge within specific areas.

By not fully concentrating on technology but focusing instead on the creation of knowledge, an organization can initially realize measurable results and then plan for a complete knowledge management rollout once the method has proven itself. Mr. Siemers is director of the knowledge management practice at Arc Partners in New York, a management consulting firm specializing in financial services companies.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.