Need of KM in Organizations: Its motivating Factors and Economic Paybacks

In today’s world knowledge is believed to be wealth. All the organizations are trying to manage this so called ‘Wealth’. I was curious why all of a sudden this need of managing knowledge emerged. Today knowledge management has evolved to become a necessary theme in many enterprises. This is because the managers have realized that the success of the organization depends on its ability to manage and generate knowledge.

Motivating Factors
The question is what led to this realization and adoption of KM in Organizations. The motivating factors are: Global Competition, Sophisticated customers and suppliers, higher rate of innovation, staff reduction, leaner organizations, understanding of human cognitive functions and new operating and management practices. (Gupta, Iyer and Aronson, 2000; Wiig, 1999). These changes were due to come with time and as you can see that apart from the epistemological perspective there are various ontological elements that gave rise to this necessity. Thus KM emerged as process that is not only cost effective but can solve managerial problems, decision giving, innovative and gave competitive edge to the organization. Along with these profits to the organization it also brought an along an answer to capturing, organizing, preservation, dissemination of knowledge. This knowledge is not just files or data stored in computer but it is what resides within organization as a whole along with the people working for it. It is this that is called organizational memory or information or wealth which needs to be stored.

Also if we try to put KM in practice we find that there is a need to put it in a proper organizational context. We need to coordinate the management of Knowledge with business, process and transactions taking place within the organization interconnection of all the entities even culture. But even after this coordination knowledge might not be managed says Wenger (2004). He argues that the main thing is the willingness of people to participate in this knowledge sharing. The people have knowledge within them and its upto them if they want to use this asset for the betterment of the organization. This sharing if done gives rise to CoP. So now we have got a link as to how organizations and CoP are related.

Economic Payback

Apart from its Motivating factors another concern is what the outcomes of KM are. Does KM really give economic payback? According to Demarest (1997) the economic paybacks are: Innovation, knowledge reuse and creation of corporate memory.

Innovation
One of the goals of Knowledge management is knowledge creation and this new created knowledge gives rise to new products. We have got many examples of this practice. Like in a retail organization various records are collected and seen which type of cheese is usually preferred by customers and then they come up with their own local brand cheese.

Knowledge Reuse
When knowledge is stored it can be reused. Demarest (1997) says that “Reuse is the holy grail of knowledge-intensive commerce.” I agree with this because in this competitive world where there are ample of opportunities a genius may leave our company and join other. All his knowledge will walk out with him, however if proper Knowledge management is taking place in the organization there will be no such loss. Also an organization will prosper more if they practice KM then the one unable to do it.

Creation of Corporate Knowledge
It happens many times in the organizations that they take certain decisions and later on it is lost. With the help of Knowledge the organizations can store what decisions were taken and how they were taken. This were the importance of IT tools comes in as these stats are stored in them. Demarest (1997) argues that based on past failures the organization can take better decisions in future. I can elaborate this further and say that if once an organization does an advertisement for some free product with its other product and if this idea is not received well by the customers they can record this failure and learn from it.


References

Demarest, M. (1997), “Knowledge management: an introduction’”, Source: http://www.noumenal.com/marc/km1.pdf (10/02/2009)

Gupta. B, Iyer. L.S and Aronson. J.E (2000), “Knowledge Management: Practices and challenges”, Industrial Management & Data Systems, P 17-2, Available at: Http://www.emerald-library.com

Wenger. E (2004), “Knowledge management as a doughnut:Shaping your knowledge strategy through communities of practice”, Ivey Business Journal January/February, Available at: www.iveybusinessjournal.com

Wiig.K.M. (1999), “Knowledge Management:
An Emerging Discipline Rooted in a Long History”, Source: http://www.krii.com/downloads/km_emerg_discipl.pdf [11/02/2009]