Knowledge Management

Although knowledge management assumes a variety of meanings depending on the context, the most basic idea behind knowledge management is the sharing of knowledge and information in an efficient and productive manner. As the Information Age, and particularly the Internet, dramatically expanded the wealth of information available and necessary to companies' operations, the efficiency of information and knowledge flow, through and between firms, in the knowledge-centered economy grew into a paramount concern. Computer and information technology developed in the 1980s and 1990s forced a shift of the field of competition to these grounds, and thus firms hoping to remain competitive needed to take account of how their knowledge is used within their organizations.

Knowledge management emerged as a central concern among businesses in the late 1980s and early 1990s, although the field itself dated back to the 1970s, when researchers at Stanford University and the Massachusetts Institute of Technology collaborated on a study of information transfer within organizations. By the late 1980s, the field had developed to such an extent that industry observers grew increasingly aware that businesses needed to take notice in order to utilize their resources efficiently and remain competitive. The increasingly global nature of major companies, along with corporate downsizing and restructuring, also brought with it a massive turn toward knowledge management as companies strove to eliminate redundancy and coordinate its efforts over a broader area. Knowledge management, by the turn of the 21st century, had emerged as one of the chief concerns of most major companies, with more than half of the Fortune 1000 firms expected to implement knowledge-management systems by 2003, according to the Gartner Group, and with many of these companies devising new positions within their ranks for knowledge managers.

In the field of knowledge management, theorists distinguish between information and knowledge. Information and data are the unprocessed mass of material available to a company for scrutiny, while knowledge has been processed and put to a practical use. Thus, information cannot be used to solve a problem until it has been intelligently processed and converted into knowledge. For example, a company may design a database to extract knowledge from a mass of information; knowledge management then seeks to implement that knowledge in the best possible manner to advance the company, determining how that knowledge can continue to be accessed, used, and manipulated.

Knowledge management aims at the elimination of redundancy in the company, as when two employees in different departments duplicate each other's actions by devising solutions to the same problem. By pooling the company's resources and working to retain knowledge within the company and enhance the flow of information, firms can realize substantial gains in an area to which investors were paying increasing attention.

As knowledge management proved an increasingly central concern among companies and IT managers, it spawned a vibrant industry of software builders and service providers designed to help businesses make the best use of their intellectual capital and capitalize on its promise. At the most basic level, companies install identical, or at least compatible, software on their computers, particularly for communications applications, and install an intranet (sometimes described as a network linking the computers), within a company to a central server.

Companies typically build knowledge management systems around this centralized network, which sorts and makes accessible to its employees all the available repositories of knowledge in searchable and sharable formats. In this way, particular problems require solving only once, after which employees in different departments or divisions need only access the knowledge-management network and search for a particular kind of solution, thereby eliminating the duplication of efforts. Moreover, employees can build on accumulated knowledge bank to devise solutions to new problems, rather than being continually forced to start from scratch. To aid this process, companies may wish to quantify and classify their problem-solving techniques and approaches to various business situations, and take an inventory of the kinds of expertise existing among the employee ranks. In addition, many companies establish an entire digital library to store all vital documents and the available knowledge accumulated through these means.

Knowledge management is not, however, just a series of technological innovations. For a company to truly reap the benefits of knowledge management, it must be an integral part of the corporate culture. That is, the internal practices, communications, structures, habits, and atmosphere of the company must be conducive to the kind of knowledge sharing on which knowledge management depends. Employees must be encouraged to share knowledge between them, either informally or by having them work in teams that continually interact, and employers must remain open to accepting ideas from and continually interacting with their subordinates. In short, the company must feel comfortable with the sharing of knowledge, and individuals must feel that they will be rewarded even if their ideas are disseminated throughout the company.