Agile working

Knowledge management: intellectual capital for SMEs

Sound industry expertise and intelligent knowledge management give businesses a major competitive advantage. Find out here how to successfully multiply knowledge.

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Table of Contents
Knowledge has an important characteristic: unlike material things and goods, it does not decrease when it is used. It increases. That makes knowledge a key production and competitive factor in today’s businesses. And knowledge management is becoming increasingly important in SMEs too. Read on and find out why that is so and collect good ideas and valuable information for your company.

An investment in knowledge pays the best interest

Benjamin Franklin, scientist and Founding Father of the USA

His statement applies better than ever in today’s information and knowledge society, in which production, services and management continue to mesh into new information and communication techniques. With innovation cycles becoming ever shorter, knowledge and information are now a key resource in businesses.

Experts in knowledge management agree: the majority of industry knowledge relevant to adding value resides in a company’s employees. The main task, therefore, is to convert the personal knowledge of the workforce into company knowledge that is as comprehensive and sustainable as possible. Knowledge management in organisations is by definition much more than purely managing data and information.

The knowledge management triangle: people, technology and business

This means that nowadays, when it comes to an organisation’s own knowledge management, it is becoming increasingly important everywhere to learn with and from each other. Even SMEs are less centrally organised and have become distributed across numerous locations, so it’s no longer possible for colleagues to exchange knowledge and information directly. On top of that, it is rare these days for people to spend their entire careers at one company.

This subject is growing in importance for businesses because staff are changing more quickly, a generation change is imminent because baby-boomers are soon to retire, and parental leave and sabbaticals are on the rise.

The great challenge in all knowledge management is to identify suitable strategies, activities and tools that will safeguard and integrate the knowledge of the workforce. In other words, there are many reasons for taking a close, critical look at the knowledge management in your own business.

Those organisations in which colleagues support each other in the acquisition of technical knowledge and new information are already well equipped for digital change. Using and passing-on existing knowledge and developing and generating new knowledge all happens through communication and social interaction

Key terms: tacit and explicit knowledge

Modern knowledge management in organisations and businesses distinguishes between explicit and tacit knowledge. Both are relevant in everyday business, as info diagram 1 shows using the iceberg model.

Definition of explicit knowledge

Simply put, explicit knowledge means any knowledge that can be clearly communicated in writing, such as relevant knowledge of rules and facts, and knowledge derived from instructions, papers and documentation.

Definition of tacit knowledge

The term tacit knowledge refers to personal knowledge and knowledge associated with people; it is also called “implicit knowledge”. For example: someone knows how something works. But the information is stored in the actions themselves. There is no method such as words or symbols to precisely describe the person’s ability.

Infographic that shows an iceberg which visualises the complex knowledge management

Knowledge management as a process

Knowledge management in practice: safeguarding a wealth of experience

One best practice case is the medium sized company Rud Schöttler Umformtechnik & Systemlieferant GmbH, with its approximately 100 employees. They have shown how successful knowledge management can be pursued in practice – in this case as knowledge safeguarding and knowledge transfer. The company makes over 1,200 different forged pieces from different kinds of steel and special materials.

To begin with, management analysed the age structure of the workforce and realised that many of their veteran employees would be retiring in the coming years, including managers with up to 40 years in the business, who worked in sales, quality management, human resources, production and engineering. It was clear that passing on information verbally would not be enough to fully secure the wealth of many years of experience.

They used a ‘qualification matrix’ to determine which relevant knowledge should be documented and transferred. Building on that, management then initiated a number of activities. The older managers concerned were to write their own roadmap in as clear terms as possible about when they would prepare which knowledge about working procedures. Where needed, they could work with a tandem partner – usually their designated successor. Observational interviews helped to clarify which knowledge was needed.

Knowledge management as a process: the variations are many

Knowledge management can look very differently in different industries and businesses. In agile projects and small businesses, a simple knowledge management approach is suitable, such as the lessons learned method. But a large mechanical engineering business, in which veteran technicians are currently changing generations, needs a structured knowledge transfer that can best capture knowledge as a productive factor.

Roughly speaking, the process of knowledge safeguarding and knowledge distribution can be divided into the following steps (according to RKW Kompetenzzentrum):

  • Select key personnel in the business so that knowledge management begins at the right places
  • Define which knowledge has to be safeguarded and managed
  • Find and select suitable knowledge management tools
  • Define activities, plan time requirements
  • Coordinate knowledge and personnel management
  • Plan and design long-term implementation

Executives and project managers often begin by asking: is knowledge management really needed in our business or team? Will it really help us achieve our objectives more quickly and more sustainably? Answering this usually entails drawing up a knowledge balance: where and why is it worth us safeguarding, managing and multiplying knowledge within the company? Once that is done, managers are usually convinced that it is worth successfully establishing appropriate knowledge management among their employees.

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