We are not big enough
It’s only for the big ones
At your last family reunion you managed to catch up with Sharon. She is now a highly regarded consultant, specializing in Knowledge Management. Her clientele includes some of the biggest companies in the country. Throughout the evening she advocated for the usage of knowledge management strategies in businesses and raved on some of her clients success stories.It got you thinking, should we use knowledge management in our business?
It’s probably not for us you think, we are a small company with only twenty employees. We don’t have the time or financial resources to be involved with that. It’s only for big companies, you conclude. But is it?
The importance of Knowledge Management
There are many definitions as to what “Knowledge Management” exactly is. Academic definitions tend to concentrate on the knowledge aspect, where is practitioners relate more to the management and generation of information side of things (Roberts 2015).According to Bassi (quoted in Roberts 2015), knowledge management is a process of creation, capture, and utilisation of knowledge in order to improve the performance of an organisation.
Organisations are involved in the acquisition, retention, transfer, and sometimes unlearning of knowledge. They formulate strategies, create processes, and utilise IT systems in order to gain competitive advantage over their competitors.
Knowledge had become more and more important with the transition from the industrial era into an information and knowledge dominated era (Cepeda-Carrion 2011). Cepeda-Carrion further argues that knowledge management can be used to gain competitive advantage. This is done by contribution to value creation for customers, and to the organisation ability to differentiate itself from its competitors.
The challenges for SMEs
SMEs (Small and Medium-Sized Enterprises) face several challenges when competing in the markets. They have limited resources, both in relations to the number of employees, and in relation to financial capabilities. A report from the University Of Otago Business School mentions financial and time challenges as the main hurdles facing these businesses in New Zealand. Therefore, It is easy to understand why the owners and managers of SMEs are reluctant to engage in formal processes of knowledge management.However, SMEs are involved in knowledge management, albeit maybe not in an official and structured way:
- They try to procure new knowledge by attending trade shows.
- They transfer knowledge to new employees after they hire them.
- They try to retain the knowledge of veteran staff when they retire, and to stop sensitive information leaking to competitors.
Can a more structured approach to knowledge management be beneficial to SMEs?
How SMEs manage knowledge?
As a result of their limited resources, SMEs need to build on their knowledge in order to compete (Deasouza and Awazu 2006). They must leverage the knowledge they possess and use it effectively. SMEs just cannot afford to waste resources.
In their research, Deasouza and Awazu found that SMEs mange knowledge differently than larger organisations. They identified five areas in which SMEs handle knowledge differently:
- The main way in which knowledge is transferred is through socialisation.
- Common knowledge is used extensively.
- Knowledge loss is not as crucial as with larger organisations.
- Wide usage of external sources of knowledge.
- Focus more on people knowledge than on technology.
Utilising KM in SMEs
SMEs can use practical approaches to help and assist them through the journey of implementing KM. Case studies and examples from similar organisations can provide useful information which can be adopted. One such source is a “Practical KM Guide for SME Owner Manager”. Some of the main insights from this handbook are:
- SMEs can increase their revenues by getting better knowledge and understanding of customers.
- Knowledge sharing allows increasing sales volumes.
- Employees have better work ethics and aptitude for learning and continuous improvement.
- Story telling can be used to spread best practice.
So, do you still think knowledge management is only for big corporations?
Smart usage of KM may just be what your company need to out perform its competitors. After all, all the others think that they are not big enough.
Roberts, j. (2015), ‘A Very Short , Fairly Interesting and Reasonably Cheap Book About Knowledge Management’.
Cepeda-Carrion, G. (2011), ‘Competitive Advantage of Knowledge Management’.
Kevin C. Desouza Yukika Awazu (2006), ‘Knowledge management at SMEs: five peculiarities’.