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Is knowledge management understood well in modern firms

An experience delivered in words on the application of KM

Is knowledge management understood well in modern firms

Tuesday February 27, 2018,

5 min Read


“There is no substitute for knowledge”, stresses the need to learn and learn more to grow. Twenty-first century’s global economic challenge lies in the management of knowledge within and across global industries and borders. 

It is noteworthy to emphasize how proper diffusion and distribution of knowledge can augment organizational performance and overall business success. Stamatis (2012) had observed how through the Red Bead Experiment, Deming clearly demonstrated the precise manner through which organizations fail to create a knowledge system that supports individual performance. 

Similarly, the desire to build knowledge within organizations can only be validated through a credible learning culture. I argue whether a skillful process at all exists in organizations to create knowledge with the ingredients of experience and information to benefit work culture.

According to Peter Drucker, recent years would see the shift from the traditional productions factors are land, labour and capital to a more meaningful economy that would lead and deliver more sustainable and meaningful results. This shift is considered to be the knowledge period. To add to this, more and more organizations around the globe are now focused to create value through leveraging knowledge. 

This is quite evident in industries like analytics and research and even in manufacturing through the commitment brought to address key management issues.

 From an academic perspective, knowledge management and its strategic value in organizations have been widely discussed by many researchers and scholars.

The growing interest in knowledge-based organizations coincides with the recognition of the basic role that knowledge management plays in creating organizational strategies, as the only valued resource that can provide a sustainable advantage. The global economy today comprises of firms where most tasks are considered to be of intellectual nature and where employees are considered to be the most important stakeholder. 


The characterization of businesses as knowledge-intensive implies that knowledge management has a more significant role than any other industrial factors like capital and labour to name a few. For example, industries like law, research and development, consultancies, engineering, information technology and analytics are some critical ones that undoubtedly fall into this category.

The idea or the notion of knowledge management has lately created a surge of research particularly within the field of technology and information system. Knowledge management has become a center point of interest due to the challenges it raises regarding organizational design and strategy. In a way, it’s still a struggle to maintain and create a competitive advantage. It is obvious that knowledge has started emerging, as an important factor of industrial sustainability, however, internal knowledge and its maintenance is still unidentified.

 Hence, knowledge anchored by internal stakeholders like employees cannot be easily used to determine success. Therefore, the key aspect remains, as the objective to improve management’s process of knowledge acquisition, integration and implementation.

On the same note, knowledge management in organizations has become increasingly vital due to its application in businesses to generate enhanced ways of organizing prevailing knowledge along with making stakeholders more effective in sharing their share of accessible knowledge. In the late 20th century, it was perceived that majority of accessible knowledge prevails within organizations employees and other internal stakeholders. 

This belief was then clarified in 1999 by Delphi group, who conducted a primary survey to understand the basic storehouse of knowledge in businesses. The results of their findings suggested a 42% of organization’s knowledge exists in the mind of the employees, which must be nurtured to generate competitive results. So does today’s industry understand the above importance and if they do, is there any significant step taken towards this goal?

Now to think about the services industry, when we look at management consulting and professional services companies, these are largely considered as knowledge-intensive set-ups and therefore knowledge management is something that is key to their operations. But questions remain – is KM applicable only to the above-mentioned industry? 

The answer is clearly a NO as knowledge is something that is significant for productivity particularly in the services industry which is mainly driven by a unique combination of people and technology even during the initial age of artificial intelligence or IoT or even block-chains.

Knowledge as a concept in management is the biggest asset for any company irrespective of the industry they are in. 

For example, the financial sector has started recognizing this along with the application of information technology as it is paving the way to create knowledge and opportunities to improve the ability to manage and utilize knowledge not just for its employees but also for their customers. For example, the use of internet information about a company can be revealed to the public and information about customers, suppliers, and markets can be gathered easily. However, these advantages may cause some challenges to the company as it may become overwhelmed by the volume of information and may not know how to use it to the company’s advantage. 


Besides, in case of a bigger or multinational organization, the application of knowledge management will also vary on the efficient cultural diversity the company showcases. So essentially, the application will depend on how well today’s firms evaluate and confront their problems with a knowledge-intensive approach. Thus, organizations need to ensure that people, particularly in top management, understand the advantages of knowledge management and what makes it useful. With this, I believe that recognizing the potential of knowledge management will encourage the industry as a whole to develop a robust KM system.