What is knowledge?

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In the society of knowledge and globalization nowadays, knowledge is becoming the important factors for the development of organizations. Moreover, knowledge management has become the one of the key strategy for the organizations to compete effectively nowadays. Besides that, the managers cannot effectively complete knowledge management without the technology systems because it also contributes to build up the organizations better such as storage, conservation, share knowledge in the organization's system.

In this essay, I will discuss about the role of knowledge management in the organization and the useful value of knowledge that effective knowledge management can brings competitive advantages to the organization. In addition, the effective way that the managers can use knowledge management and the necessary skills are required to successfully apply knowledge management in the organization through the knowledge life cycle.


According to Fernandez (2004), the three of knowledge, data and information are not the same. Firstly, we need to define the both of data and information. Data comprises the facts, observations or perceptions (thoughts, idea) and data represents raw numbers or assertions (statement) and not associated with context. For example, the number of pizzas and breads are sold in the restaurant. According to Fernandez (2004), information is a data that is categorized, analyzed. For example, the number of pizza and bread are sold per month. So, the manager of the restaurant may base one that information in order to set up the right decision about concerning the food's price and quality.

Any organizations also have specific knowledge. Knowledge is expressed through the skills of each people. However, the term “knowledge” is easily mistaken in knowledge management because the relation of data and information. So, how to understand knowledge properly? Knowledge is taken shape form human's brain and human use that knowledge to thinking. In organizations, knowledge is usually associated with the daily tasks, work processes and assessment standards. In other word, according to Nonaka and Takeuchi (1994), knowledge is intrinsically different from data and information, knowledge is defined in an area as justified true beliefs about relationships among concepts relevant to that particular area.

Business Dictionarry, http://www.businessdictionary.com/definition/knowledge-management.html, accessed on 5th May 2011.

Birkinshaw, J. and Sheehan, T. 2002. Managing Knowledge Life Cycle. Mit Sloan Management Review. Massachusetts Institution of Technology.


In the organization, each person will have their own knowledge through their learning and experience which called tacit knowledge. It belongs to that person and only can be used by them. Tacit knowledge is difficult to explain and express it to outside. For example, the famous tennis players, he has his own skill that no one can completely mimic or learn from him. In contrast, when that person show their knowledge to outside as information by explaining or writing down in the documents so that other people can receive, fully understand that knowledge and can transform it into their own knowledge which called explicit knowledge.

Why knowledge management is necessary in the organization nowadays? We can take an example, in the company, if the excellent manager has a very important and necessary knowledge leave the company and work for other organizations, then that company will absolutely face with many difficult problems such as the lack of human resources and cannot resolve it in the long term. So, the company will burden the serious loss. For example, according to my father, the company had to face with the lack of human resource when the person who keeps the important position left the company and the company lost the most important asset and the company have to spend hundreds of millions to train the new employees annually. Moreover, if an organization does not know to take advantages and keep the amount of personal knowledge, the organizations will completely loss the knowledge resources to their competitors. In addition, knowledge management is also essential because the organizations sometimes will face the issue of the overload of information such as there is too much information that will leads to have no understanding of existing information and do not how to reach to the necessary information. So, an individual cannot control it and do not how to approach the important information. Therefore, the quality of information is more important than quantity.

In fact, many managers realized that the importance of knowledge resources but it not easy to find the answer the question: How to use and maintain the knowledge assets.  In order to fulfil effectively knowledge management in the organization, the manager needs to completely understand the knowledge life cycle.


According to Birmingham and Sheehan (2002), knowledge has four stages of life cycle: Creation, Mobilization, Diffusion and Commoditization.

Creation:In the creation stage, when the first idea comes up in the person's mind, they cannot understand it completely. So, the organizations need to build an environment to check the value of the knowledge through doing research and experience. Besides that, the organization needs focus on hiring new employees to use the new knowledge

Mobilization:In the mobilization stage, knowledge is developed; organizations try to extract its value. In order to fulfil it, companies need to mobilize knowledge internally and keep it not exposed from outside in the proprietary. In this stage, the employees try to analyze and transfer knowledge by working experience. At this time, the technology system of organization plays a role to allow the transferring of informal knowledge.

Diffusion: In the diffusion stage, it is quite opposite with other stages. The organizations will not try to keep the idea and knowledge for their own strength any more. By doing so, they start to sell it to the customers and marketing the values of knowledge by the difference of media. During this time, the organization can face with the problems that the value of knowledge can be the competitive advantages for competitors to copy by the ease of information access. Besides that, to solve the problem, the companies need to diversify their product and best service to make the differences and compete with others competitors.

Birkinshaw, J. and Sheehan, T. 2002. Managing Knowledge Life Cycle. Mit Sloan Management Review. Massachusetts Institution of Technology.

Commoditization:At the commoditization stage, the valuable knowledge has been diffuse totally. So, the organization needs to focus on supplying the best practices and developing the processes. During this stage, the technology system plays a role to help the organization store all the documents.


Today, any small and medium enterprises often face with many difficult problems such as the lack of capitalized and lack of human resources. Therefore, the enterprises also need to apply the new modern management such as knowledge management in order to effectively compete to others enterprises. In the 21st century, for the modern organizations, knowledge management has gradually become the decisive factor for the development of business. Besides that, knowledge management also is considered one of the effectively competitive strategies for all types of enterprises in the future. So, if any the organization knows how to manage and use effectively their knowledge resources, they can get more competitive advantages to ensure the sustainable development of their organization.

In addition, knowledge management creates competitive advantage for small and multinationals company base on different intrinsic properties of good knowledge management practices. For instance, KM creates:

- Strong corporate culture

- Reduce cost and support to decision making

- Improve managerial leadership and minimize the corporate tension in multicultural corporate environment

Birkinshaw, J. and Sheehan, T. 2002. Managing Knowledge Life Cycle. Mit Sloan Management Review. Massachusetts Institution of Technology.

For instance, the large corporate have many subsidiaries. The employees between the branches do the same work with others. So, that issue will waste a lot of time and cost. Therefore, the knowledge management helps the large business firms expand the relationship between the subsidiaries, increase productivity, reduce cost, and store the working experience and the knowledge resource of the employees.


In the society of economic globalization today, managers gradually know the important role of knowledge management because knowledge management has become an important factor to lead to the development of many enterprises and competitive factor with others enterprises base on the value of knowledge. In order to successfully implement knowledge management, the leaderships must know how to learn new more knowledge, share knowledge and take advantages from others organization's knowledge. Besides that, the managers also need to focus on the human factor which is one of the main successful key. For example, the managers must create the environment of knowledge sharing in the workplace for their employees so that for those employees can exchange and learn more new knowledge.


In summary, knowledge is not the same with data and information. It is created from valuable information which is created by processed data. Then people can use that knowledge to make the right decision. In other words, knowledge is defined in an area as justified true beliefs about relationships among concepts relevant to that particular area. In additions, in order to develop the organizations to the new innovation and sustainable way, the leaderships need to have the personal knowledge and always update the new knowledge by the various ways. Besides that, go along with the indispensable conditions is the knowledge sharing environment, all the managers should make the good and sociable working places for the employees to experiment so that their employees can update and share knowledge to contribute and help the companies in the future.