Knowledge management and business growth

Business knowledge is an important strategic asset. It includes the skills, experience and insight your business builds and uses. It supports all your business activities and helps you operate effectively.

Types of business knowledge

Knowledge can exist in many forms, but usually falls under one of three main categories:

Tacit knowledge

This is personal know-how or skills rooted in experience or practice (eg aesthetic sense or intuition). Tacit knowledge is difficult to write down, visualise or transfer.

Explicit knowledge

This is articulated knowledge recorded in documents, memos, databases, etc. Explicit knowledge is easy to store, distribute and communicate.

Embedded knowledge

These are skills and understanding locked in processes, products, rules or organisational culture (eg informal routines, codes of conduct, organisational ethics).

Knowledge can belong to individuals or groups within your business, or exist at the organisational level. You can also share it with different organisations.

You can apply business knowledge in many organisational areas and competencies, from financial management and organisational governance to market analysis, strategic planning, and human resources.

Examples of business knowledge

Examples of knowledge that already exists in your business include:

• the skills, competencies and experiences of your workforce
• the designs and processes for your goods and services
• the industry or market data you've gained from research
• your files or documents (electronic or otherwise)
• your customer data or information on suppliers and stakeholders
• your plans for future activities, such as ideas for new products or services

Importance of business knowledge

Knowledge has great value since it is inherently unique to your organisation. It shapes and drives your business activity, your ability to sell or do more, and stand apart from your competitors.

Individual knowledge is easily lost, especially when key employees leave. Make sure that your employees share knowledge and skills, and pass them on to their successors wherever possible. For example, you can:

• hold brainstorming sessions
• organise training courses
• maintain up-to-date documentation about processes and procedures

See more on sharing knowledge in business.

What is knowledge management in business?

Knowledge management is a structured way to capture and use your business’s knowledge to create value. It helps you create, share and apply knowledge across your organisation. 

Your knowledge base includes what you know about customers and your employees’ skills and experience. Using this knowledge well can improve efficiency, reduce risks and help you make the most of opportunities. This is known as the knowledge advantage.

Effective knowledge management can bring many benefits. However, like any process, it also has challenges to consider.

Advantages of knowledge management

Some of the common benefits of knowledge management include:

• improved organisational agility
• better and faster decision making
• quicker problem-solving
• increased rate of innovation
• supported employee growth and development
• sharing of specialist expertise
• better communication
• improved business processes

A good knowledge management system will make it easy to find and reuse relevant information and resources across your business. This, in turn, can help you to:

• create better products and services
• develop better strategies
• improve profitability
• reuse existing skills and expertise
• increase operational efficiency and staff productivity
• recognise market trends early and gain an advantage over your rivals
• benchmark against your competitors
• make the most of your collective intellectual capital

A resourceful collaboration will bring more views, diverse opinions and varied experiences to the process of decision-making, helping your business to make decisions based on collective knowledge and expertise.

Challenges of knowledge management

The key to any successful knowledge management system is knowing its limitations. Some of the common challenges include:

• finding ways to efficiently capture and record business knowledge
• making information and resources easier to find
• motivating people to share, reuse and apply knowledge consistently
• aligning knowledge management with the overall goals and business strategy
• choosing and implementing knowledge management technology
• integrating knowledge management into existing processes and information systems

To overcome these challenges, you should:

• develop clear processes to capture, record and share business knowledge
• define the scope and objectives of any knowledge management initiatives
• create a corporate culture of knowledge sharing between employees and management
• set clear goals and strategies to help you utilise the collective knowledge (otherwise, it will be of no use to your business)
• consider budget, strategy and training needs for any new knowledge management system
• consider change management strategies for introducing new knowledge management practices

Read more about knowledge management systems and learn how to create a knowledge management strategy.

Businesses get knowledge from many sources, both inside and outside the organisation. For example, you can collect knowledge from:

• meetings
• reviews
• audits
• processes
• performance assessments
• market research
• customer feedback

However, a primary source of knowledge in a business is the experience that develops within it.

Organisational memory

It is important to keep the skills or know-how you have built up in your business. Find clear ways to share this knowledge across your team. For example, you might create procedural guidance based on your employees' best practice. See how to create a knowledge strategy for your business.

Employee and supplier relationships

You can capture knowledge by seeking the opinions of your employees and your suppliers - they'll have their own views on how your business is performing. You can use formal surveys to gather this knowledge or ask for their thoughts informally.

Customer knowledge

You should understand your customers' needs and be clear on what they think of you. You may be able to develop knowledge sharing with customers that is mutually beneficial. Talk to them about their future requirements and see how this knowledge can help you research and develop ideas, new products and services.

Market knowledge

Stay up to date with developments in your business sector. How are your competitors performing? How much are they charging? Are there any new entrants to the market? Have any significant new products been launched? Try to understand your competitors and use market research and market reports to develop knowledge of the industry you operate it.

Knowledge of the business environment

Developments in politics, the economy, technology, society and the environment could all affect your business' development, so you need to keep informed. Consider setting up a team to monitor and report on changes in the business world.

Professional associations and trade bodies

Get information from professional, academic and government publications, reports from research bodies, trade and technical magazines, etc. Search for a trade association.

Trade exhibitions and conferences

These may allow you to see what your competitors are doing and discover the latest innovations in your business sector. Read about trade shows and exhibitions.

Product research and development

Scientific and technical research and development can be a vital source of knowledge that can help you create innovative products and retain your competitive edge. 

Non-executive directors

Recruiting non-executive directors can be a good way for you to bring on board specialised industry experience and benefit from ready-made contracts. Learn more about recruiting company directors.

Collaboration between businesses and associated institutions

Groups of businesses or associated institutions with common interests - known as clusters - sometimes join forces in order to share knowledge. Find out how to fuel business growth through collaboration.

If only a few people in your business hold important knowledge or skills, there is a danger that these will be lost if they leave or retire. Even short absences, such as illness or bereavement, can cause problems if knowledge is not shared.

Build a knowledge-sharing culture

You should try to build a culture in which knowledge is valued and shared across your business. Consider the best ways of sharing new ideas and information with your staff. For example, conduct regular meetings to brief employees and share ideas and best practices. You can also run workshops or brainstorming sessions to encourage new ideas and improvements.

Create a central knowledge bank with useful guidance on key tasks. An intranet works well, as it allows staff to share updates and suggestions. You could also decide to appoint a senior manager as a knowledge champion to oversee how knowledge is shared and used.

Protect and exploit your knowledge

As part of your knowledge management, you should also make sure that you protect any intellectual property that your business owns.

Registering your intellectual property rights may help stop competitors from copying your intellectual assets. It may also allow you to profit, for example by licensing your business' knowledge.

Use IT to manage knowledge efficiently

You can protect and use your knowledge more effectively by setting up simple systems to store and access information. Your files, whether digital or paper, contain useful knowledge that can help improve your business. You can also use different technologies to manage and organise this knowledge. Find tips to help you choose the right IT system for your business.

Keep knowledge confidential

Your employment policies help keep business knowledge confidential. For example, you can ask staff to sign non-disclosure agreements when they join the business. This helps them understand the importance of confidentiality from the start.

You can also set up employment policies for your business, such as employment contracts, to reasonably limit your employees' freedom to leave and:

• work immediately for one of your rivals (restraint of trade clauses)
• set up a competing business to yours in the vicinity (restrictive covenants)

Incentives and training

Staff incentive schemes can encourage staff to share ideas and improve the business. Training also helps spread knowledge, skills and best practice across your organisation.

To get the most value from your business knowledge, take a clear and planned approach to finding, organising and sharing it. You can do this by using a knowledge management strategy across your business.

Creating a knowledge management strategy

To develop a knowledge management strategy, you first need to understand how your business currently manages knowledge. You should:

• review how effectively your business uses knowledge
• analyse how you collect and share information
• recognise that managing knowledge is an ongoing process and a key part of your business strategy

You should also identify the value of knowledge to your business and the ways you could exploit it for financial gain. This may be, for example, through gaining a larger market share, developing new products or selling and licensing your protected intellectual property to others. Make sure that your knowledge management approach fits in with your overall business growth strategy.

Buy-in for your knowledge strategy

For a knowledge management strategy to work, senior managers need to support it, understand its benefits and stay committed. Work with them to find the best ways to collect and use knowledge. You could also appoint a senior manager as a knowledge champion. Make sure all staff and stakeholders understand the benefits of good knowledge management.

Different knowledge management systems can help your business use knowledge more effectively. However, some can be complex to set up and maintain. Choose systems that suit your business and add value without becoming a burden. You may want to consult an IT specialist. Before investing, carry out a technology needs assessment. Your system will deliver the greatest value for your business if you align it with your IT strategy. 

The main types of IT systems used in knowledge management are described below.

Database tools

Databases store information so it can be easily accessed, managed and updated. For example, you might use a database to store customer contact information, orders and preferences. In many situations, businesses can gain clear benefits from databases.

A data warehouse is a central place to store information from different systems and in different formats. Many businesses now use digital asset management to organise and access information, especially if they sell online. Speak to an IT specialist for advice if you are considering a data warehouse.

Data mining involves analysing your data to identify patterns. For example, data mining can show which products are most popular or which customers are likely to buy certain items.

Reporting and querying tools help you create reports and analyse data. For example, they can show how many of your sales were handled by one particular employee.

Web-based tools

Business intelligence portals are websites that bring together all sorts of potentially useful information, such as legal issues or details of new research.

The internet and search engines can be a powerful source of knowledge, although always check that your sources are reliable. Online forums and newsgroups can also provide useful insights, but check the credibility of the author before trusting the information.

Other tools for knowledge sharing and management include intranets and extranets. An intranet is a secure internal network for the sole use of your business. An extranet is similar to an intranet but you can extend it to customers and suppliers. 

Social tools, such as social media channels and blogs can also be useful when it comes to sharing knowledge.

Customer analysis tools

Customer relationship management (CRM) software helps you understand your customers and target them through channels such as your website, email and phone. Read more about customer relationship management. Website analytics tools, such as Google Analytics, show how customers use your website. This helps you improve performance and target customers more effectively.

If you invest in a new information system, consider your business needs, the available technology options and how you will implement it. Each stage may bring challenges and opportunities.

Discover the importance of knowledge management for your business, and how to manage knowledge effectively to benefit your business.

This video will help you learn how to identify, capture and share valuable knowledge across your organisation. This can help improve efficiency, support better decision-making and drive business growth.