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Knowledge management in business

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Online Course: Knowledge Management in Organizations

The company and business knowledge; why knowledge management is important to business

The intelligent organization is able to mobilize the different kinds of knowledge that exist in the organization in order to enhance performance. It pursues goals in a changing environment by adapting behavior according to knowledge about itself and the world it thrives in. The intelligent organization is therefore a learning body that is skilled at creating, acquiring organizing, expanding, renewing, and sharing knowledge, and applying this knowledge to design its behavior. Organizations compete on the basis of knowledge.

To thrive in this environment, businesses need to rely not only on the data processing capacity of IT but also on creativity and innovation of people - both inside and outside the organization.

What is knowledge management

A company is not a machine, but a living organism. Its blood is information, its lymph is knowledge.
By the name Knowledge management, methods and software resources that enable organizing, sharing and capitalizing business knowledge, company knowledge, are recognized.

Knowledge management caters to the critical issues of organizational adaptation, survival, and competence in face of increasingly discontinuous environmental change. It embodies organizational processing capacity of information technologies, and the creative and innovative capacity of human beings. It seeks to make the best use of the knowledge that is available to an organization, creating new knowledge, increasing awareness and understanding in the process.

KM in a company is concerned with strategy, processes and technologies to acquire, store, share and secure organizational understanding, insights and core distinctions. KM in a company is closely tied to competitive advantage, innovation and agility. Knowledge is a process (considered by some as “multilayered and multi-faceted, comprising cognition, actions and resources”), knowledge management is a concept and a process. knowledge is stored in the individual brain or encoded in organizational processes, documents, products, services, facilities and systems. Therefore, knowledge to be managed must be recorded, must be represented.

Knowledge management gives priority to the way in which people construct and use knowledge. It derives its ideas from complex systems, often making use of organic metaphors to describe knowledge growth. It is closely related to continuous organizational learning and innovation. It recognizes that learning and doing are more important to organizational success than dissemination and imitation.

According to Bukowitz and Williams (1999), knowledge management is the "process by which the organization generates wealth from its intellectual or knowledge-based assets".

A key issue to knowledge management is tacit knowledge

Generally, it is clearly distinguished the tangible company information, contained in data bases or documents (paper or digital), from the intangible information coming from knowledge, know-how and the expertise of the company staff (which is referred to as "immaterial capital"); in cognitive terms: "tacit knowledge". 

Indeed, the human resources of a company is what constitutes the force, the reactivity and the dynamism or, more precisely, the synergic work of the full staff. The term "collective intelligence", that is growingly cited in literature, evidences the fact that the good operation of a company depends principally on the capacity of having available the relevant information at the right moment.

Knowledge management is multiform, and has varied goals. It engages the company staff and is scarcely supported by the information system (explicit knowledge). In a few words, it tries to identify and valorize the company's knowledge capital.

Embodying tacit knowledge in actual technologies and decisions requires managers who are as comfortable with images and symbols, e.g. with the representation of knowledge.

The knowledge management project

But with the current development of information and communication technologies, the inverse effect could be over-information sometimes qualified as "informational pollution" that is really "textual or data oppression": "information overload burns out information"!
The goal of a knowledge management project is, consequently, to identify, capitalize and valorize the intellectual capital of the company, engaging all the staff. A knowledge management project is articulated in phases, often known as the "knowledge management virtuous circle":

1) localizing knowledge (identifying it at the sources),
2) knowledge preservation (in a knowledge repository, presumably with a knowledge management tool),
3) knowledge valorization,
formalization and sharing of knowledge.

Starting a knowledge management project is more often the evidence of a deep conviction than of a pure financial calculation, and must generally be supported by the higher management, without which the project wouldn't even take off (it would collapse before).

Indeed, this cannot be reduced to the installation of a documentary management system (as some people believe) over a network or over a collaborative system of any sort. It is a very different thing.

Some activities in knowledge management work:

Create systems and/or processes that are interrelated to assist people (managers, learners, employees...) in the creation and transfer of knowledge from one entity to another.

Creation of knowledge bases - best practices, processes, experts directories, market intelligence, representations of processes, etc.

Active process management - of knowledge gathering, classifying, structuring, storing etc.

Development of knowledge centers - focal points for knowledge skills and facilitation of knowledge flow.

Introduction of collaborative technologies - knowledge servers for rapid knowledge access.

Organization of communities of practice - networks of experts who collaborate across and beyond an organization’s functional and geographic boundaries.

Creating a logical structure and developing a learning system that enables continuous improvement. Hoard knowledge to achieve power.

Knowledge management might be somehow expensive, but not knowing
what is it that we know ( ignorance?) is even more expensive!

Knowledge management benefits more from maps and semantic networks than from models,
more from markets than from hierarchies.

Another key issue is process management

Knowledge management projects focus on staff organization, characteristics and activity (Human Resources Management = HRM).

KM programs focus on organizing employees into communities of practice and building repositories of best or proven practices. There is a tight (often overlooked) connection between knowledge management and process engineering and management, and fusing them in a single consistent holistic architecture that must have a positive impact in business intelligence, as the primary beneficiary of km practices are precisely business processes. In fact, reciprocally, any type of process design effort also has a knowledge management dimension, that people will automatically create and use knowledge.

Most business processes contain multiple, asynchronous, long-running processes and lots of content of all types, including data, information and knowledge. It is symptomatic that when a business process stops, screeches, is when knowledge is being searched for, updated or created.

When business processes are not documented or described, process re-engineering becomes very difficult.

Explicit knowledge

Explicit knowledge (better: "information") can be an input source to knowledge management practice, a reference. Tacit knowledge, difficult to detect and to store, comprises ideas, abilities and masteries ... in our precious minds, that develop as they immerse in the flow of their work activities A good sharing of explicit knowledge is not simple, but to identify, extract, profit from and share tacit knowledge is a strenuous enterprise. Calculating its ROI corresponds to finding a gauge to measure the immaterial.

Project management with knowledge management

In project management, for instance, you can observe the evolution of stages/phases regarding the difference between foreseen costs and real costs, the level of innovation.

Objectives of the application knowledge management strategies and technologies are the reductions of rejections, lawsuits and non-quality; the stimulation of constant growth, of being more competitive, of constantly adapting to constant change. It is difficult to discern the profit proportion that can be attributed to knowledge management, but we know that it is through these terms that profits from knowledge management can be expressed.

Sharing tacit knowledge

The purpose of distributing information is to encourage the sharing of information. Non shared knowledge is an industry risk.

The canonical case: the key person that works alone in a company vanishes: dies, retires, goes to a competitor, or just quits. The company management realized that most of the time, that employee was working alone. It is very dangerous and risky to leave a certain amount of certain knowledge to a single person. Don't think that this regards only the qualified personnel or managers, if a group of foremen (of the same age) leaves the factory at the same time, a reaction from management seems important. Sometimes the losses resulting from a non-decision (or non-investment) are priceless.

Early retirements and increasing mobility of the work force lead to loss of knowledge.

All too often, knowledge exists with multiple points of view instead of the collective best thinking. It is occasional but not integral to the business. And, most important, it is available but not used very much. Company knowledge must be traceable and reusable.

Without the need of calculations, dedicating some technology, somebody and the engagement of part of the staff to this seems invaluable.

Areas of application

Though knowledge management techniques can be applied to any business function, main interest is currently dedicated to tacit knowledge, process management, core competences, Human Resources Management, globalization, skills, R&D, marketing and ERP.

Most of our learning (about 80%) occurs informally, and whereas most training department activities focus on the most obvious, knowledge management strategies focus also on informal learning, blurring  the distinction between "learning & development" and knowledge management. As organizations realize that the theory and practice of their people (their intellectual property) is what makes the difference. It means they have to bring structure and contextual support to their information systems to really leverage its value and also capture the informal learning opportunity, to build a better integrated learning culture.

Another key issue in knowledge management is system complexity

  1. The boundaries of a system are not determined. What the boundaries are is usually based on the observer’s needs and opinion, not a system property. The environment is growing in complexity. To continue to be in business requires organizations to learn enough about the environment and use this knowledge to timely change their own behavior.

  2. Complex systems are nonlinear. Simple cause and effect relationships between elements are rare. A small stimulus may cause a large effect, or have no effect at all.

  3. Complexity in a system is distributed. A single element does not know what’s happening in the entire system. System complexity is created by the relationships between elements and, as a result, no element in the system is able to control it as a whole.

  4. In a complex system, the relationships between elements are short-range, that is, information arrives from close neighbors. The richness of the connections signifies that communications will pass across the system but will probably be modified themselves on their way.

  5. An organization is an open system. Open systems are complex systems, that take information, material and energy from the external environment, transform these resources into knowledge, processes and structures that produce goods and services. Due to this, complex systems are usually not in equilibrium: in spite of the appearance of stability, the system is constantly changing.

Products and services are increasingly complex, endowing them with a significant information component.

Knowledge management
is fundamental to manage change and innovation

Staff changes, organization changes, work methods, market changes, new technologies. competition, product changes-innovation.


Results of using knowledge management methods and strategies

The application of knowledge management methods develops globalization, improves work systems, rationalizes and simplifies processes; stimulates the development of effective systems and has an incidence on costs reduction.

Increase in productivity.

Better position in the market.

Better use of staff talents.

The users of knowledge management technology, methods, and strategy are the organizations that want to grow, not those that want only to survive. To know WHAT, you need information (explicit knowledge), to know WHY and HOW, you need knowledge, knowledge management.

The learning organization

In the learning organization, everybody is learning, everybody is teaching and being taught, everybody is coaching and being coached.

If two 'knowledge' corporations have the same intellectual potential, the primary differentiating feature then becomes a matter of which corporation can learn faster. The learning organization shares many key properties with the learning human: sensing, memory, perception, motivation, interpretation (i.e. learning/not learning): adaptive behavior initiates a new cycle of learning as the organization makes decisions.

Marketplaces are increasingly competitive and the rate of innovation is rising.

Description of Knowledge Master's Knowledge Master software products capabilities

Being tacit knowledge (“the knowledge to manage”
) a  construction of the human mind (made of concepts/ideas, relations and categories), KM conceptual knowledge bases (a technology extension of the semantic networks approach) is ideal to structurally represent and manage company knowledge.

Using knowledge structures eases retrieval and the updating of knowledge bases through the key points. 

Knowledge items can be described in detail.

Multilayered knowledge bases enable almost unlimited knowledge bases, adding further knowledge precision.

A KM knowledge base can be used as a cognitive interface to a document system, linking physical documents.

KM knowledge bases can be linked to the Internet.

A real time knowledge collaboration platform enables group work, with integrated videoconference and instant messaging.

Many search functions enable  anything to be found in contents and knowledge structures, easing reasoning and decisions taking.

Path recognition and creation for higher class concept descriptions and explanations.

The automatic recognition of relevance.

A knowledge base can be exported to many external formats (documents, reports, exchange structures like XML, etc.,) for reuse.

The benefits of using "Knowledge Master" and "Knowledge Server" software products

Discover the real issues behind names using advanced analysis functions.

Discover multiple approaches and understanding.

Use knowledge management methods, tools and processes.

Quick prototyping.


Explore situations.

Timely reaction to change.

Use an advanced decision support tool: get insight into your critical thinking.

Reduce complexity and improve your critical thinking.

Develop a clear picture, a model.

Reasoning on a model is simpler than reasoning on the real thing.

Maintain focus in meetings.

Strategy development, conflict resolution, competitor analysis, project mapping.

Process structuring, description, documentation and management.

Making interdependencies explicit.

Risk identification.

Structured brainstorming.

Release your creativity.

Obtain textual reports.

Add extra meaning with categorization.

Full featured printing.

Make more informed decisions.

Facilitate communication within groups, see the positive and negative consequences of an action.

Detect key assumptions and areas of conflict.

Import/export from/to XML and XTM.

Product development.

Lifelong learning is mandatory, this is the lifelong learning tool!

The effect of knowledge management methods in business is an added value and is measured in money, even though it is not an item in balance.

Knowledge management is not fashion in a company, it is about making money!


Bukovitz, Wendi R., & Williams, Ruth L, (1999). The Knowledge Management Fieldbook. London: Pearson Education Limited.

Consulting on Knowledge Management and Business Intelligence

:: Pages for a deeper insight ::
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Characteristics of knowledge management in the enterprise

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Knowledge management in business

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The Knowledge Manager Job

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Creativity, Innovation and knowledge management

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Organizational Learning

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Brainstorming in Organizations

punto elenco Knowledge Management in Organizations
punto elenco Project management with knowledge management tools

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