Why Knowledge Management is Important

Posted: November 26th, 2013

Why Knowledge Management is Important


In the study of knowledge management, most scholars begin by differentiating knowledge from information. This is because, the two terms have been used as synonyms making it hard for people to distinguish any differences between the two. According to an article written by Wilson in 2002, knowledge constitutes what has been comprehended by the human mind. The article continues to note that, knowledge differs from person to person as the interpretation process is different. On the other hand, information exists outside the human mind and consists of data that has been put in an appropriate context (Wilson, 2002). According to most scholars, there is no widely accepted definition for knowledge management. Each organization has come up with a definition that is suitable to their objectives.

Several definitions have come up from different quarters explaining what is knowledge management and its role in the modern business organization. Rutrell Yasin defines knowledge management as a discipline that deals with the formulation of strategies that enable an organization to tap into knowledge often referred to as insights and experiences (2010). The knowledge is then distributed among the different organizational stakeholders through knowledge management systems (Yasin, 2010). An article published in the CIO agrees with Wilson opinion that there is no universally accepted definition for knowledge management. However, it goes onto to say that knowledge management is a process through which companies bestow value upon their intellectual assets (CIO, 2010). In this perspective, knowledge management can be defined as a process that highly involves the interpretation and dissemination of knowledge among employees, employers and even other organizations for the purpose of enhancing value.

The importance of Knowledge Management in Information-based organizations

            In the modern world of business, information has become an integral part of any business. People have gradually come into terms with the fact that information is powerful and plays a major role in the success of any business. This view has led to the development of a new face for organizations popularly referred to as organization-based organizations. An information-based organization is one that is made up of employees who are specialized in specific areas related to the organizations objectives (Barnes, 2001). In this model, employees are referred to as knowledge specialists due to their recognition in specific areas. This model has been adopted in the place of the command and control model whereby managers made all the decisions in the company. Leaders in an information-based organization use the knowledge developed by each specialist for the maximum benefit of the company. In this model, the leaders’ responsibility is to tap each specialist’s capabilities and use them effectively. Due to the high amount of knowledge in an information-based organization, leaders require knowledge management systems for several purposes. The following is an explanation of the importance of knowledge management to information-based organizations.

            One main importance of knowledge management to information-based organizations is that it makes knowledge usable. Knowledge in its raw form only exists in the human mind (Yasin, 2010). Therefore, someone has to identify a knowledge specialist and put them in a position where their knowledge can be used to benefit the organization. Knowledge management systems are used to identify people who possess specific knowledge that can be of use to the company. Afterwards, the specialist is appointed as an employee of the organization and the knowledge they possess used to serve customers or educate other employees. It is important to note that without knowledge management systems information-based organizations cannot maximize the knowledge possessed by their employees. An information-based organization must invest in such systems, which will help them tap and distribute the information possessed by the specialists.

Knowledge management also helps to improve efficiency in an organization’s operations and service to customers. First, knowledge management systems are used to identify each specialist’s strong points and how their skills can be used for the benefit of the organization (Barnes, 2001). From this information, a database is created analyzing each person’s capabilities and the position where they are best suited. This database smoothens organizational operations, as each specialist is where they are required. Additionally, whenever a problem arises, the most suitable person is assigned within the shortest time possible. From the application of knowledge management, the organization becomes more efficient as tasks are accomplished on time and by the right persons.

Knowledge management operations are also concerned with tapping the knowledge possessed by the specialists before they leave the organization. Though each organization aims at retaining all its specialists, there is always the probability that they might leave due to unavoidable circumstances. This results in the loss of knowledge that is useful to the organization. Continuous loss of knowledge may lead to a decline in the success experienced when the specialists were still in the organization. In this perspective, knowledge managers have developed systems where specialists document their knowledge for future use by the organization at a fee (CIO, 2010). This ensures that the organization has an archive of knowledge that can be used to train future recruits reducing the costs of hiring new specialists. Additionally, costs of purchasing new sources of knowledge are lowered by this documentation. Senior specialists can also delegate duties to personnel as they already have reference material. This gives more time to acquire new knowledge suitable for the organization.

Knowledge management is also important to an information-based organization as it encourages innovation. All knowledge management systems are not only aimed at preserving knowledge but also in sharing it among different people. In this perspective, specialists share knowledge among themselves and even with knowledge managers in the organization. Through the sharing, new ideas come up leading to the creation of new products and services (Barnes, 2001). Successful knowledge management will often lead to an overall improvement of the organization. Through the different specialties of knowledge created, it is easier for the organization to implement ideas as they have been shared among all stakeholders in the company. Through constant innovation and improvement in quality, the company is able to achieve a competitive edge against competitors. In summary, knowledge management is an integral part of information-based organizations and its importance cannot be undermined.

The role of Information Technology in Knowledge Management

            In the modern world, information technology (IT) plays a major role in every organization’s operations. Many businesses have incorporated technology into their activities in order to fit in the contemporary world. However, scholars note that IT plays a major role in enhancing the application of knowledge management in any organization. One of the ways in which IT enhances effective knowledge management is by facilitating the procedures required. For example, knowledge management requires the creation of databases that document each specialist’s skills. IT generates these databases and ensures accuracy in the storage of information (King, 2009). IT is also used to enhance easy access to the information required by the organization. As seen earlier, knowledge management enhances easy access to people with the needed skills. In conjunction with IT, the organization can simplify and quicken the process of accessing this information.

IT also enhances knowledge management through providing a platform for the dissemination of knowledge. As seen earlier, knowledge management is concerned with the sharing of knowledge among different stakeholders. On the other hand, IT has created different platforms through which people can create and share knowledge regardless of the dimensions of space and time (King, 2009). Therefore, through technological innovations like the internet, knowledge managers can easily disseminate knowledge to many people at the same time. In this view, IT works for the advantage of knowledge management.

As much as IT can benefit knowledge management, its systems depend on machines, which degrade the importance of the human connection in knowledge management. Studies in knowledge management show that it is highly effective when used not only for financial success but also as a way of enriching human relationships in the organizations. Knowledge is highly specific and depends on the socio-cultural context for it to be meaningful. This is unlike information, which can be applied to any setting. IT does not provide a socio-cultural platform and therefore undermines the humanistic values encoded in knowledge management (King, 2009). Additionally, through the different interpretations that are required for knowledge to fit in an IT platform, dilution of meaning is imminent. Therefore, IT is only a facilitator as opposed to a driving force behind knowledge management.


            As seen from the above analysis, knowledge management is an important aspect of information-based organizations as it helps improve efficiency for the achievement of a competitive edge. The implementation of knowledge management can also make use of IT to ensure success in accessing, storage and dissemination of knowledge. In this view, knowledge management should be incorporated into every organizations success strategy.


Barnes, P. C. (2001). A primer on knowledge management. Retrieved from
http://www.accaglobal.com/students/publications/student_accountant/arch ive/2001/18/57627

CIO.com. Knowledge Management Definition and Solutions. Retrieved from http://www.cio.com/article/40343/Knowledge_Management_Definition_and_Solutions

King, W. R. (2009). Knowledge management and organizational learning. London, UK: Springer.

Rutrell, Y. (2010). How Knowledge Management became sexy again, Government Computing News. Retrieved from http://gcn.com/articles/2010/05/03/knowledge-management-gets-hip.aspx

Wilson, T.D. (2002). The nonsense of knowledge management. Information Research, 8 (1). Retrieved from: http://informationr.net/ir/8-1/paper144.html

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