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Knowledge Capital

Knowledge Capital: The 21st Century Leverage

December 20, 2001

Knowledge Capital: The 21st Century Leverage

As companies search for ways to gain competitive advantage, they are increasingly leveraging their knowledge capital. As we transition from the industrial to the knowledge society, effective use of knowledge is becoming one of the important distinguishing factors between leading companies and also-rans.

Worldwide, revenue for knowledge management (KM) services will jump from $2.3 billion in 2000 to $12.696 billion in 2005, a 40.7% compound annual growth rate. KM services include consulting, implementation, operation (outsourcing), maintenance and training.

Figure 1 - Worldwide Knowledge Management Services Spending 2000-2005 ($B)

Although currently the United States is the major market for KM services, by 2005 it will only account for 48% as corporations around the world seek to make better use of their knowledge.

Implementing a KM system is not merely a technical undertaking; it requires management endorsement and buy in among employees. Each of the three core elements of a KM implementation -- people, processes, and technology -- plays an interdependent role with the others.

On the technical side, the key elements of KM, such as messaging, unified interface, and access to a personalized set of applications, are in fact capabilities best delivered through the infrastructure. Thus KM should be designed as an integral element of the infrastructure instead of being tacked on.

One Size Doesn't Fit All  

Knowledge management doesn't have a “one size fits all” definition. "KM enables an organization to capitalize on lessons learned by helping it gain insight and understanding from its own experience. A critical component of the success of knowledge management is the organization's ability to apply this knowledge to generate new knowledge," according to Knowledge Management: The Backbone to Success in the 21st Century, IDC #CA004BIH, January 2001.

But in all cases, companies need to start by leveraging their employees with a focus on performance enhancement, especially via collaboration.

KM implementations can be tailored to the type of company. For example, the focus in a business-to-business environment will be on making the company easier to do business with by emphasizing customer relationship management (CRM), with the collaborative aspect extending to external partners.

In a business-to-consumer environment, the focus might be on marketing and on content management, personalization, and community development to offer enhanced user experiences.

Where to Start?  

Creating a "knowledge-enabled organization" should focus on three fundamental principles of design:

Build knowledge capital. Invest in knowledge efforts that create long-term competitive advantage rather than short-term return on investment (ROI).
Link knowledge areas. Develop conceptual and transactional areas of knowledge within the organizations by connecting planning, research, marketing, ebusiness, and customer relationship.
Drive knowledge solutions to higher ground. It isn't enough to simply collect information and make it available. The knowledge must trigger business decisions.

All companies contain the raw material that can be used to make a more effective organization; the trick lies in how to leverage the knowledge. Now's a good time to start.

--Molly Upton

Related Research  

Knowledge Management: The Backbone to Success in the 21st Century - IDC #CA004BIH- January 2001
This document examines the drivers and inhibitors to knowledge management.

U.S. and Worldwide Knowledge Management Market Forecast and Analysis, 2000-2005 - IDC #24658- May 2001
This document looks at the growth trends in knowledge management services by geography and by industry.

Knowledge Management Solutions with a B2E, B2B, and B2C Focus - IDC #22643- July 2000
This document examines how implementations can vary according to the type of business.

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