Why Manage Knowledge?

Increasingly, organisations are knowledge-intensive. Knowledge is that vital resource that gives them competitive advantage and adds value to its operations. If you look at the market value of a public company, it is typically 5-10 times greater than the assets (predominantly physical assets) recorded in its balance sheet.

Yet many organisations do not give as much attention to managing their knowledge as they do their finances. They have Chief Financial Officers but not Chief Knowledge Officers.

The Benefits

With some 15 years of documented KM practice in all types of organizations, the benefits of a systematic approach to managing knowledge are clear. In our analysis of many cases, we have identified a hierarchy of benefits:

1. Benefits from more efficient processing of information and knowledge, including:

  • faster retrieval of information
  • minimizing duplication, e.g. "one version of the truth"
  • saving or freeing up the time of busy professionals
  • knowing who knows what and who is doing what
  • improved quality of information
  • access to latest thinking and most current knowledge

which in turn leads to:

2. Internal organizational benefits, including efficiencies and effectiveness through:

  • sharing of good and best practices
  • faster time-to-market for new products
  • reduction of waste and re-work
  • better management of risk
  • retention of knowledge before experts leave or retire
  • cost savings, both in people's time and processing of information

which in turn leads to:

3. Benefits to external customers and stakeholders, including:

  • improved customer service and satisfaction
  • faster solving of intractible and novel problems
  • greater consistency in servicing global customers at different locations
  • improved product and service quality, more closely aligned with customer needs
  • better value for money
  • enhanced reputation and market image

The tools we use to identify and quantify benefits include the knowledge audit, the benefits tree and various measurement techniques.


When knowledge management emerged into the mainstream management arena in 1995, a survey at the time showed that 70% saw knowledge as a primary driver of revenue growth. Research by knowledge pioneer Ikujiro Nonaka concluded:

"Successful companies are those that consistently create new knowledge, disseminate it widely throughout the organization and quickly embody it in new technologies and products."

Today, we would add knowledge in services as equally important.

The reason for taking knowledge management seriously should now be clear. Many thousands of organizations around the world now manage their knowledge more systematically. But in our experience very few do it to the highest levels that can reap the maximum benefits.

Last updated: 19th February 2011



Our resources section has several articles that will give you a good grounding in some of the basics and practicalities of knowledge management.

See full list of articles


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