The fact that fortune-500 companies have invested heavily in knowledge management activities indicates its importance in business. These companies are aware of the fact that investment in knowledge will pay them best interest. it is a long-term investment, which will give returns, to improve their bottom line. The time, energy and money spend on knowledge building and managing activities constitute the investment and the return on it is huge, but unfortunately it cannot be measured. Similarly because there is no accounting rules which enable us to measure return on investment in knowledge.
The outset it will be convenient to clearly distinguish between knowledge, information and data. in practice, the three terms are often confused. Knowledge builds on information extracted from date. Date is discrimination between physical states that neither may or may nor convey information to an agent. Whether it does so or not depends upon the agents prior stock of knowledge. whereas data can be characterized as a property of things, knowledge is the property of agents predisposing them to act in a particular ways. Information is that subset of data residing in things that activate an agent. Information established a relationship between things and their properties.
Knowledge provides companies is sustainable advantage. Those firms which compete with these fortune companies are always trying to match their products quality and prices with them, but by the time that happens, fortune firms move on to a new level of quality or efficiency, because of their ability to create knowledge and manage it effectively, which gives them an upper hand. This Knowledge advantage is sustainable because it generates increasing returns and continuing advantages
Therefore for business managers, it is essential that they no longer give undue stress on documentation but also support discussion activities, informal chatting and also encourage team building. During these activities individuals share information, which they get during their day-to-day activities within and outside the organization. it is in fact a knowledge management network updating itself. it helps the organization to move faster towards its objective, as it makes activities carried out in business more effective and productive.
Before starting to create and manage knowledge within the organization, it should see to it that the culture really suits it. The expertise may not be very eager to share their knowledge with their subordinates in order to maintain their influence and importance intact. it is therefore responsibility of management to support the knowledge management activities, without which it would be a total waste of time and money spent.
The politics played with the organization is a hindrance, which can hinder the knowledge sharing activities. Hence the top management must ensure that a conducive environment for knowledge managing process exists within the firm. For those companies which are in existence for long and for which knowledge management is a new activity, it is a difficult thing to shade away the traditional ways of carrying business and get started with a new norm of knowledge building and sharing based business. For starters, it is an advantage because everything in new for them when they begin.
Intellectual capital has a tremendous value in business organization. To manage it, companies now must start with knowledge management centers within their firms. The job of knowledge manager will be to facilitate knowledge sharing, identifying the knowledge sources within the firm such as knowledgeable people and making them responsible to give their intellectual inputs to others, also to implement creative programs to train people, to maintain an information processing system to ensure exchange of ideas and messages.
The importance of knowledge manager will be clear from the following example. Recent survey conducted by Reuters indicates that 38% professionals say that they waste time to manage information and 49% say they feel unable to handle all the informational inputs they receive. Input form knowledge manager can help them to sort out these problems.