What Is Knowledge Management? 5 Ways It Can Bolster Your Business

Andy Cook
August 3, 2020
What is Knowledge Management

Knowledge management is the process of documenting and distributing important company information internally to improve the effectiveness of your organization. And studies show that when done well, knowledge management can save you plenty of cold, hard cash — over $300,000 in productivity costs per year for a 100-person company in fact.

That’s because, according to a McKinsey study, the average worker in your company spends almost two hours per day looking for information they need to do their job. But when they have access to the information they need (through a knowledge base with search and discovery capabilities, for example), it can free up 35% of that lost time.

Needless to say, effective knowledge management is critical to the success of your organization. Below are the things you need to know to do it well, plus all of the ways it can help your organization level up (including real-world examples from other companies).

What Is Effective Knowledge Management?

All efficient knowledge management systems share three common goals:

  1. They provide easy access to institutional knowledge that helps employees work more efficiently and autonomously.
  2. They keep that knowledge up to date and relevant.
  3. They create a single source of that knowledge to avoid confusion.

However, the physical system that helps any given company achieve these goals will often look different, depending on its size and specific needs.

For example, some organizations could rely on something as simple as writing and sharing documents in Google Drive. But for other companies with more nuanced requirements, they may need something more complex, such as a machine learning system that standardizes data in real time.

Finding the best knowledge management solution for your business starts with understanding your organization from the following vantage points:

  • Technological: What technologies could enhance knowledge sharing and creation?
  • Organizational: What processes would best support ongoing knowledge capture?
  • Ecological: How do our teams already share knowledge within the ecosystem of our organization?
  • Cultural: How can our company culture facilitate and encourage knowledge sharing?

Some organizations may need to focus more on the culture aspect of knowledge management and less on the technological. But wherever your organization lands and however you choose to implement your knowledge base to manage it, prioritizing knowledge management can help your company thrive.

Below are a few of the common benefits you’ll see, as well as a few companies that have already reaped some of these advantages.

How Knowledge Management Bolsters Your Business

A well-designed knowledge management system benefits your company because it helps your employees. And as Richard Branson has famously said: “Take care of employees and they’ll take care of your business.”

Here are five ways knowledge management helps your employees and ultimately boosts the success of your organization.

1. Reduces interruptions that threaten productivity

Interruptions erode productivity. A UC Irvine study found it takes more than 20 minutes to fully resume a task after an unrelated interruption.

In the workplace, interruptions often stem from a lack of information. Whether it’s a Slack message or a trip to someone’s desk, people who can’t find answers will usually turn to their colleagues for help. Whoever offers it will need time to regroup after the interaction — time that could be better spent getting something done (or taking a real break).

With a centralized knowledge management system in place, people find most answers on their own, enabling everyone to work more efficiently.

This was the case in 2005 with Southern Co. When Hurricane Katrina hit in 2005, Southern Co. had already spent a year expanding their knowledge management system to meet worst-case scenarios. As the leading electricity provider for the Gulf Coast region, that meant building a content management system that provided engineers with instant access to design plans needed to restore service. As a result of their efforts, Mississippi service was restored in 12 days instead of the projected 28.

2. Minimizes miscommunication

Misunderstandings between colleagues can undo progress, breed resentments, and hurt customers — which can also hurt your bottom line. In fact, a survey of 400 organizations by Holmes estimated that employee misunderstandings cost a combined total of $37 billion.

These misunderstandings included “actions or errors of omission by employees who have misunderstood or were misinformed about company policies, business processes, job function, or a combination of the three.”

The implications are clear: What we don’t know can hurt us. By ensuring company-wide access to team policies and procedures, organizations that lean into good knowledge management reduce the odds of costly mistakes.

For example, Amazon’s use of knowledge management techniques has helped the company transform from an online bookstore to the number one ecommerce retailer in the United States. Their ability to provide customers with the right information at the right times (plus personalizing it at scale) has been a significant factor in the company’s success.

3. Protects your team when employees leave

When a member of your team leaves, they often take valuable institutional knowledge with them. This loss is especially pronounced when experienced or senior employees move on or retire. A lot of the knowledge and expertise those employees bring to your organization is tacit and therefore harder (if not impossible) to teach.

That’s where knowledge management practices — instilling a culture of knowledge creation and sharing — are so critical to your long-term success. You can encourage current employees to document their projects and processes to ensure their knowledge is preserved for future hires.

When it’s done well, knowledge sharing can preserve your business’ momentum, not to mention saving you a lot of money in training and onboarding costs.

One such company is Pratt & Whitney, an aerospace manufacturer known for its success with knowledge management. The company’s journey began with the realization of a common problem: half of its engineering team could retire in a few years. To prevent critical knowledge loss, Pratt & Whitney embarked on an integrative, holistic knowledge management strategy that helped them save an estimated $25 million.

4. Reduces onboarding time and training friction

A negative onboarding experience can send even the most talented new hires packing very quickly. For example, according to HR Dive, almost one-third of new employees are willing to quit within the first 90 days as the result of a negative onboarding experience.

That’s because new hires crave order, structure, and clarity. And when they encounter one too many undocumented processes, it impedes their ability to learn. This has a couple of negative effects:

  1. Your seasoned employees will typically bear the brunt of new hires’ questions, pulling established employees away from their own work.
  2. Overzealous new employees may take matters into their own hands, causing a cascade of otherwise preventable mistakes.

However, an effective knowledge management system (one that helps new hires get answers to their questions on their own) can make this process a lot easier on everyone. Not to mention it can cut down on the time it takes to get new employees up to full productivity!

One high-growth company recently leveraged a knowledge base to fuel their ability to scale. Wistia is a video hosting platform with a team that’s quadrupled over the last five years, from a handful of people to over 100 spread out across multiple cities. And while a single person had managed onboarding, that was no longer possible, given the scale of the organization. So they documented critical onboarding knowledge in Tettra so that new hires can use Slack to search for answers to their questions rather than constantly having to track down someone who can help.

5. Enables better internal communication

Communication gaps between and among teams can make it difficult for individuals to find reliable business information. For instance, if your engineering team manages bugs in a system your support team can’t access, this will hurt the support team’s ability to communicate timely updates to customers.

Similar issues occur when sales teams don’t understand how an organization’s product or service works. Without this visibility, they can’t accurately communicate its value to prospects — a misstep that will inevitably come up should they become customers.

An effective knowledge management strategy solves for these gaps in two ways. First, it promotes transparency by ensuring company-wide access to the right information. Second, it democratizes subject-matter expertise. Each team gets to take the lead on documenting their knowledge and ensuring its completeness and accuracy in order to keep everyone accountable.

Effective Knowledge Management Is Integral for Long-term Success

The more you can eliminate the informational scavenger hunts that keep your employees from pursuing more meaningful work, the more you’ll see improvements in productivity, retention, and culture.

However, doing so becomes increasingly more important as your organization gets bigger and more complex (not to mention more difficult to implement).To succeed in the long-term, empower your team with a unified knowledge management system that helps them make smarter, swifter business decisions starting now.

Tettra can simplify the process of building such a system. Learn more here.