Running a business requires many resources that determine its value. Apart from physical resources, people, and technology, the way knowledge is created, used, and shared is critical. Especially for small and medium-sized businesses, a clear and target-oriented knowledge management system will enable better strategic decisions. Read on to find out more.

What is knowledge?

In the context of entrepreneurship, knowledge can be defined as ideas, concepts, or observations that are used to take action for profit.

The relationship between data, information, and knowledge

Data itself is just a fact that has no meaning without interpretation. Only after it has been processed and organized does it become information that answers the questions like: Who? What? Where? When? In turn, explaining and understanding the information we receive gives us the knowledge we need to make decisions.

Knowledge is an invaluable part of a company’s business strategy because it can create a competitive advantage. It is important to identify weaknesses and knowledge gaps.

What is knowledge management?

No matter what you’re doing, it’s a good idea to have a plan of action. Running a business is no different. A strategy allows you to realize your company’s mission and goals by specifying the direction and type of actions you need to take. Effective knowledge management in an organization makes it easier to capture, share and put knowledge to work.

Codification and personalization

Some of the most common strategies used in practice are codification and personalization. In addition, they are connected to the concepts of formal (explicit) and tacit (implicit) knowledge.

The codification strategy is based on formal knowledge stored in corporate documentation – technical specifications, training materials, reports, analyses, etc. This form greatly facilitates the transfer of knowledge to new and existing employees.

The personalization strategy, on the other hand, is based on interpersonal contact between employees and the exchange of experiences between them. In this case, sharing so-called tacit knowledge takes place during team meetings, conversations, discussions, etc.

knowledge management strategy

Knowledge management in SME

Running a business is a demanding task due to the high dynamics of change and the need for constant development. This can be especially challenging for small and medium-sized businesses whose reach and resources are significantly limited.

The contribution of the SME sector to economic growth is substantial. Small and medium-sized enterprises are often a source of innovative solutions and diversify the market. They have a simplified organizational structure and usually offer niche products and services.

The capital used to develop the business usually comes from the owners’ savings, bank loans, or sometimes from private investors, such as business angels. They employ a relatively small number of people (small companies – no more than 50 employees, medium-sized companies – between 50 and 250 employees) so that they can maintain a close relationship with management and identify with the company’s goals.

Authority is centralized – most decisions are made solely on the basis of the owner’s opinion and experience. Overseeing all areas of the business in this way carries risks – the future of the business depends on the owner’s competence, some areas of management may operate inefficiently, and the intellectual potential of employees may go unnoticed.

The benefits of implementing a knowledge management strategy

Making changes takes time and effort. Putting a knowledge management strategy into practice depends a lot on the attitude of management and employees. However, it is necessary for the development and growth of your company’s potential. How can you benefit from making some changes in your management style?

  • Increased efficiency – a coherent and organized management system allows employees to easily access information, improving the quality of their work,
  • Better collaboration and communication – using information systems and various channels of communication guarantees greater transparency and building positive relationships within the team,
  • Effective decision-making process – access to the knowledge and experience of employees helps to gain the objective perspective needed to take actions in line with the company’s goals,
  • Recognizing gaps and shortcomings – as you complete and document the knowledge you have gathered, you can identify additional opportunities to improve your business processes, security – by storing data on servers or in documents, you reduce the risk that the data will leave your organization.

Success factors for implementing knowledge management in an organization

If you don’t know what success factors are, read this article. Again, there are several organizational characteristics that can significantly facilitate introducing positive changes in strategic knowledge management. These include:

  • Willingness to continuously improve and learn,
  • Willingness to transfer knowledge to others, employee involvement,
  • Adapting the organizational structure and technical facilities,
  • Emphasizing the value of knowledge and the benefits of using it.

Barriers to implementing knowledge management strategies in SMEs

Changing habits takes time and effort as there are several obstacles in the way. Knowing in advance the limitations that may arise during this process will make it easier for you to deal with them. Here are some possible issues that will require your attention:

  • Reluctant employees – senior executives may be afraid of a leak of information that would damage the company’s position, while other employees may be afraid of losing a certain place in the hierarchy,
  • Lack of commitment – often stems from or is related to the above-mentioned cause. It can relate to employees and the owners themselves, who will focus more on other activities,
  • Lack of time and resources to focus on managing knowledge,
  • Distrust in advisors – criticism from an outsider can be perceived as an attack rather than an attempt to help and bring about change.

How to implement a knowledge management strategy in your company?

In fact, implementing a knowledge management system can be challenging for business owners. Lack of information and inexperience can be daunting at first. However, the added value you can gain is well worth it. Keeping the following tips in mind will make it easier for you to successfully complete the process:

  • Assess your current situation – examine the effectiveness of the existing system, paying attention to procedures, personnel, technology, and organizational structure. Detecting irregularities will allow you to determine what is worth improving,
  • Clarify your goals – once you’ve identified the organization’s weaknesses, set your long-term and short-term goals so you know what you’re aiming for and can monitor your progress,
  • Prepare for the changes – adaptation of the new strategy involves the entire enterprise. These changes also have an impact on the company’s employees, who are a valuable asset,
  • Take action – the final and most challenging stage is the implementation of the knowledge management system into daily use. This requires not only a lot of money but also a proactive attitude on the part of owners and employees.

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How to implement a knowledge management strategy in small and medium-sized enterprises? 5 useful tips andy nichols avatar 1background

Author: Andy Nichols

A problem solver with 5 different degrees and endless reserves of motivation. This makes him a perfect Business Owner & Manager. When searching for employees and partners, openness and curiosity of the world are qualities he values the most.