Knowledge May be Your Company's Greatest Untapped Resource

May 09, 2005

There's an infinitely renewable, long-lasting power source that can be tapped by any business, says Uday Kulkarni, Associate Professor of Information Systems at W. P. Carey School of Business. But Kulkarni isn't talking about natural energy sources, such as solar or hydrogen power. He's referring to the brainpower that's trapped inside the heads of workers, company documents and assorted computer files. "It's one of the key resources an organization has," he says.

Kulkarni, with doctoral student Ronald Freeze, recently wrote a paper that describes how a business can access and use the knowledge power within. In "Measuring Knowledge Management Capabilities," the authors present a game plan for creating a knowledge management infrastructure that pinpoints knowledge sources and then helps employees solve problems and achieve goals, such as developing a new product, raising an existing product's sales or boosting employee productivity.


An intangible resource




Federal Reserve Board Chairman Alan Greenspan recently observed, "Seventy percent of organizational assets are intangible assets," of which knowledge is a growing portion. Despite its potential to help a business grow and prosper, knowledge remains an unmanaged resource, admits Kulkarni. "Many people confuse knowledge with information," he says. But Kulkarni believes that's a simplistic view, because information doesn't necessarily impart insight or experience. "[Knowledge] is much higher, conceptually speaking, than just pure information," he observes. "It's something that somebody can reapply later on for a more effective decision in the company."



Also driving the need for knowledge management is the fact that businesses are employing more knowledge workers than ever before. Programmers, engineers, marketers and educators are just a few of the knowledge-based occupations that have experienced rapid growth over the past couple of decades. Additionally, jobs that once weren't considered particularly knowledge-intensive have now expanded into new intellectual territories. Kulkarni recalls his recent experience working with an Intel secretary. "She was not only good at arranging meetings, taking notes and doing the job she was supposed to do, but she had intimate knowledge of technologies like collaboration tools for virtual meetings," he says. "This is the type of person that companies want to employ nowadays."



Steadily rising business competition is also pushing more companies toward knowledge management. Kulkarni points to the telecommunications industry as a field where companies are struggling to find whatever advantage they can grab. "In the past, they would sell boxes," he says. "Now, they would like to upgrade that product into what they call a 'solution.'" But adding custom-tailored features and functions to a product means that the company must also obtain a deeper knowledge of its market and customers. "You need to have intense knowledge about the product you're selling," says Kulkarni. With added pressure on development, sales, marketing and other business units to provide unique solutions, a knowledge management system is the best way -- perhaps the only practical way -- to give employees timely and accurate information.


Immersed in knowledge




Kulkarni says organizations pondering a knowledge management initiative should "think big but start small." In other words, they should be willing to make a full commitment to knowledge management but, initially, limit their project to a single business unit or process. "The next thing to do is to identify the goals you want to improve within that process or unit," he says. The goals can be both general and specific, such as setting an objective to generally improve overall sales while cutting shipping costs by at least 5 percent.



Modern computer technology gives companies the ability to collect, store, access and manipulate knowledge in many different and sophisticated ways. "While technology is not the solution to managing knowledge, it offers the means to participate in certain stages of the knowledge life cycle," says Kulkarni. Computers can be used, for example, to create a form-based registration system that captures expertise profiles of various domain experts on different topics. A document database, on the other hand, is invaluable for categorizing and searching various types of knowledge documents. Meanwhile, a data warehouse, a kind of enterprise memory system, allows users to combine knowledge with decision support and modeling tools.



While technology makes knowledge management a practical proposition for almost any organization, sophisticated tools alone can't guarantee a project's success. "It's not about the systems, it's about people," says Kulkarni. This means knowledge management needs to become an integral part of everyday business processes. That goal isn't always easily achieved, however. Experts aren't likely to freely volunteer their knowledge, and ordering employees to take time away from critical tasks in order to drain their brains can be counterproductive. To counter these obstacles, Kulkarni recommends integrating knowledge management capture and access activities into regular workflows. Knowledge capture and retrieval can be linked to major milestones, such as asking workers to contribute "lessons learned" at a project's halfway point or conclusion, or encouraging employees to search for and view relevant knowledge documents at the start of a new task.



Culture also plays an important role in knowledge management. Organizations should promote an information-sharing environment, says Kulkarni. This can be accomplished in various ways. Initially, supervisors may encourage the regular sharing of work-related problems and solutions, serving as role models in the open discussion of relevant issues. Later on, the company may decide to recognize and reward employees who exhibit knowledge sharing behavior. The company should also take the time to create and publicize a well-defined knowledge management policy, he advises.



Once the knowledge management infrastructure up and running, it's important to be able to quantify results. "You really need to be able to put measurements into place," says Kulkarni. "Many businesses don't do that; they think the benefits will come automatically." Before-and-after measurements on goals, employee participation, infrastructure performance and other areas can help a company determine how well its initiative is working as well as exactly where improvements need to be made.



Knowledge's value




Kulkarni expects knowledge management to become more deeply ingrained in businesses over the next several years as companies begin to understand the practice's potential to add to the bottom line. "Knowledge's value is increasing at a very high rate, especially in forward thinking, competitive businesses," he says.



But Kulkarni warns business leaders not to view knowledge management as a quick fix for sagging revenue. "Understand that the payoff is long-term and uncertain," he says, "but your returns can potentially be gigantic and lead to a sustainable competitive advantage."