The Importance Of Knowledge Management Management Essay

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Knowledge is quite distinct from data and information in nature. Data includes facts, observations, or perceptions which may or may not be true. Information, according to is the content that represents analyzed data. Knowledge is defined in an area as justified true beliefs about relationships among concepts relevant to that particular area.

The skills required for effective knowledge management are to identify, generate, acquire, diffuse and capture the most valuable benefits of knowledge that sets up a strategic advantage to the organizations.

Knowledge life cycle consists of: creation, mobilization, diffusion and commoditization to explain the early emerging knowledge to it maturity.


The knowledge has been created more and more nowadays. The important of knowledge management is recognized and effectively implement by many organizations.

In this brief essay, I will explain the differences between knowledge and information. After that, there will be the discussion of the importance of knowledge management in the organization as well as how effective knowledge management can create competitive advantage for the organization. Also, the essay explains the skills required to effectively implement knowledge management process in the workplace through the explanation of knowledge life cycle.


According to Fernandez (2004), to define knowledge, we need to distinguish it from data and information. Although they are sometimes used interchangeably, knowledge is quite distinct from data and information in nature.

Firstly, data includes facts, observations, or perceptions which may or may not be true. By itself, data shows the raw numbers or assertions and may therefore be devoid of context, meaning, or intent. However, it can be easily captured, stored, and communicated using electronic or other media (Fernadez, 2004). For example, the schedule of movies will be show in a day, or observation of number of left-handers in a group of people illustrates data.

Information, according to Dalkir (2005), is the content that represents analyzed data. Also, Fernandez (2004) defined information as a subset of data, which only includes those data that possess context, relevance, and purpose. It means that information manipulates raw data to obtain a more meaningful indication of trends or patterns in the data. For example, for the cinema director, the numbers indicating the daily sold tickets (in dollars, quality, or percentage of daily sales) of each movie are considered information. So, the director can use such information to make decisions concerning pricing and extra or cancel some movie shows.

According to Fernandez (2004), there are two different ways to distinguish knowledge from data and information. The first one considers knowledge to be at highest level in a hierarchy with information at the middle level, and data to be at the lowest level. By this view, knowledge refers to information that enables action and decisions, or information with direction. Although, knowledge is the richest and deepest of the three, and is consequently also the most valuable, it is intrinsically similar to information and data.

In the more complete perspective way, according to which knowledge is intrinsically different form information, knowledge is defined in an area as justified true beliefs about relationships among concepts relevant to that particular area (Nonaka, 1994). For example, the daily sold tickets can be used, along with other information such as information on the pop corns and soft drinks sold at the cinema, to compute the total revenue. The relationship between the information is an example of knowledge.

Hence, as what I understand, knowledge is how people get information from data, or more valuable information from less valuable information.


Knowledge management was defined by Nonaka and Takeuchi (1995) as the process of applying a systematic approach to the capture, structure, management, and dissemination of knowledge throughout an organization in order to work faster, reuse best practices, and reduce cost of rework from project to project. It means that Knowledge management is the logical process that helps people to use knowledge effectively and efficiently.

There are 4 business drivers that make knowledge management become important and increase in application for today according to Dalkir (2005). Firstly, the globalization of business means that the expansion of organization to global with multisite, multilingual, and multicultural in nature. The expansion results in the more complex work environment that all organizations have to face because of the increase in the number of subjective knowledge items. The second driver is the leaner organization. As the required work environment, people need to work faster and smarter as knowledge worker to adopting an increased pace and workload. Another business driver is the corporate amnesia. This driver explains that people as a workforce is no longer expect to spend entire work life with the same organization which will create problems of knowledge continuity for the organization and places continuous learning demands on the knowledge worker. Finally, technological advances make people more connected. The advances in information technology not only have made connectivity ubiquitous but have radically changed expectations, which workers are expected to be on at all times.

Base on the importance of the knowledge management, all organizations need to develop a suitable and effective approach to manage their knowledge. By doing so, they will get many benefits to create competitive advantages. At first, effective knowledge management approach will provide many benefits to each individual employees of the organization. It helps the employees in doing their job and save time through better decision making and problem solving. It builds a sense of community bonds within the organization and helps people to keep up to date. It also provides challenges and opportunities for employees to contribute. The effective approach also brings benefits to organization. It helps drive strategy for organization, solves problems more quickly, and diffuses best practices. Also, it improves knowledge embedded in products and services. It cross-fertilizes ideas and increases opportunities for innovation. In addition, it enables organizations to stay ahead of the competition better, and builds organizational memory.

Therefore, in my point of view, knowledge management is essential for all type of business nowadays. With an effective knowledge management, the organization can facilitate collaboration and help knowledge worker connected. It also helps organization in making decision base on complete, valid and well interpreted data, information, and knowledge.


Nowadays, most of organizations realize that the important of managing knowledge effectively. For doing so, they need to be always able to identify, generate, acquire, diffuse and capture the most valuable benefits of knowledge that sets up a strategic advantage to themselves. It also needs to have the ability to differentiate the information, which is digitizable, and true knowledge assets, which can only exist with in the context of an intelligent system (Dalkir, 2005). To be able to clearly understand the requirements for effectively implement knowledge management processes in the workplace, we may discuss the knowledge life cycle and strategies in each stages of the cycle.


Base on the research of Birmingham and Sheehan (2002), knowledge has a life cycle. Their study had showed that new knowledge is born as uncertainty thing, and it form into shape as it is tested, matures through implementation in reality, is diffused to a growing user, and finally becomes broadly understood and recognize as common practice. The knowledge can process through four stages of knowledge life cycle: creation, mobilization, diffusion and commoditization.


At this stage, knowledge first appears in someone’s head as an idea. In fact, no one can fully understand the idea or emerging knowledge, even if person creating it. In doing business, the suitable strategy in this early stage is to test the idea on its commercial viability. To encourage this activity, organizations need to create an environment which requires adjustments in the following areas:

Informal Knowledge System: the organizations can lay out their space in an open plan that has many common areas, give their employees time to experiment, and provide resources for training programs and conferences in order to grow up knowledge effectively.

Information Technology Systems: technology should be considered to connect people who have interest at highly specialized internet forums rather than to codify and store emerging knowledge.

Human Resources: organizations regularly create knowledge should hire people in using new knowledge for critical feedback.

External Relationship: the contact with external customers and suppliers will encourage the experimental of new idea.


In this stage, knowledge continues to be improved, and the organization will extract more value from it. To achieve it, organizations need to mobilize knowledge internally and keep it away from outsiders. There are approaches for doing that:

Informal Knowledge System: the organization can encourage the internal transferences among employees by building an internal network.

Information Technology Systems: the IT should focus on technology that can enable the informal transfer of knowledge, and the system need to make it possible for adding comments on the subject from users.

Human Resources: thinkers, doers, mavericks and pragmatists are needed in order to fully transform new ideas into valuable knowledge.

External Relationships: it is still important to maintain strong relationship with customers and other partners in this stage.


In this diffusion stage, the organizations will accept the leakage of knowledge, and no longer try to keep the knowledge under wraps. They will spread out the knowledge by selling it to outsiders. Again, the managers should consider following approaches in this stage:

Informal Knowledge Systems: knowledge in this stage will be disseminated widely and quickly, which requires a system that focuses on training employees and encourage their use.

Information Technology Systems: an extensive knowledge database will be useful for the organization during this stage. The competitive advantages will stem from the ease of access to information.

Human Resources: customer consultants will be needed in this stage, so that they can work with customers and recognize the value of applying the knowledge to customers’ problems.

External Relationship: organizations should focus on building strong customers relationship by their services, and using their brand to create the differences with other competitors.


The organizations concentrate on managing knowledge that is already well known. The basic knowledge has been completely diffused. However, there are many opportunities to extract value from current knowledge to generate one in this stage. The approached to extract value as follow:

Informal Knowledge Systems: in this stage, the use of formal knowledge systems will be more valuable than the informal one. The systems will help the organization to supply the best practices that can add value to well developed processes, and encourage new ways of commercializing existing knowledge.

Information Technology Systems: organizations should develop effective search engines and retrieval systems because of the significant volume of documents that have gathered overtime.

Human Resources: it is similar to the requirements of the diffusion stage. However, the demand for the knowledge may decline the demand for the jobs will be reduced. It is better to use the contract employees to solve this problem.


Base on my research, knowledge is much different from data and information. It is how people use data to crate valuable information and from less valuable information to more valuable one. In other words, knowledge in an area can be defined as justified true belief about relationships among concepts relevant to that particular area.

Every organization needs to implement effectively its knowledge management processes due to four important drivers. By doing so, it will bring many benefits to the business as well as the individual employees.

The organizations need to understand the knowledge life cycle in order to manage the knowledge. The cycle comprises four stages, which are creation, mobilization, diffusion, and commoditization, points out the essential skill needs to effectively implement knowledge management process.