Knowledge is a valuable resource that binds an organisation together. Knowledge governs how we make decisions, how we react to change and how we grow.
For enterprise, what an organisation ‘knows’ defines the standard of its operations. Capturing and having open access to organisational knowledge can create sustained competitive advantages by driving both performance and innovation.
If managed correctly, knowledge can become a company’s most valuable asset. It can be shared, retrieved, added to and utilised in perpetuity.
In our three-part article series, Foundations of Knowledge Management, our experts provide practical tips that can be applied in your business.
Our three-part series covers:
In the first instalment, we provide an overview of how organisations generate information and convert it to knowledge, give a high-level view of the types of knowledge organisations generate, and introduce the concept of harnessing knowledge to generate a company’s most valuable asset.
“Information is not knowledge. The only source of knowledge is experience” - Albert Einstein
A useful way to think about ‘knowledge’ is by reference to the concept of ‘information’. Many organisations collect and preserve large quantities of information and raw data while producing goods or providing services. The volume of such information has increased exponentially with the widespread adoption of computing systems in all aspects of business. From programmable logic computers that talk to machinery, to stock, inventory, sales and raw materials management systems - the collection of information now permeates all aspects of industry.
However, the mere existence of such information and raw data doesn’t make it valuable. In fact, such information has no intrinsic value to a business without interpretation.
When businesses apply analysis, abstract ideas, interpretation and evaluation to raw data or information, they derive knowledge. Through this process a business can transform information into something that can be shared, learned from, applied and added to over time.
Knowledge (as distinct from information) can be used to make data-based decisions more quickly, reduce the time taken to solve problems and enhance learning curves for new employees. Conversely, if information remains uninterpreted, any potential value that could be extracted goes unrealised, at a significant opportunity cost to the business.
Types of knowledge: Tacit and explicit
As the creation of knowledge from information generally requires at least a basic level of human interaction, it often resides, at least in the first instance, in people’s minds. This type of knowledge is referred to as tacit knowledge and is based on experience, know-how and intuition.
Tacit knowledge is generally undocumented. As a result, if an employee leaves a business, this valuable tacit knowledge can leave with them. This creates a knowledge void in the business and provides the new employer, often a competitor, with a valuable asset previously held by the company.
When knowledge is written down, documented or codified, it becomes tangible, sharable and retrievable. This form of knowledge is referred to as explicit knowledge. To fully leverage the raft of information that they generate, businesses should aim to maximise the conversion of information and data into knowledge, and the conversion of tacit knowledge to explicit knowledge.
To remain competitive and sustain intellectual advantage, it’s vital that businesses understand the relationship between information/raw data, tacit knowledge and explicit knowledge, and how they can be managed and leveraged as an organisation’s most valuable asset.
The many ways in which the value of knowledge can be leveraged will be discussed in our next article Five ways that capturing knowledge can bring value to your organisation.
Contact our Knowledge Management experts to find out more about how we can help you leverage your knowledge inside your organisation.
Contributing authors: Matt McLean and Amy Jackson