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Knowledge Management (KM) Benefits Organizations Because It is the New Age Solution

Benjamin Franklin once said, “An investment in knowledge always pays the best interest”.  The following statement is true: the benefit of management is always exceptional and any organization has a lot of information on its hands and if used in the best possible manner, it enables employees and partners to work smarter, and boost the satisfaction and quality of service provided to customers.   With this thought in mind, let's first understand what the term Knowledge Management in organizations means and how Knowledge Management KM benefits organizations because it is the new age solution.

What is the definition of Knowledge Management System (KMS)?

Knowledge Management (KM) is an inevitable chore for any organization and it is “the process of creating, sharing, using, and managing the information of an organization”.  It usually includes 3 stages: Accumulating, Storing, and Sharing Organizational Knowledge.  International Data Corp. estimates that in any organization in which staff members are trying to find information, 70% of them can’t find the information they are looking for, and Fortune 500 companies lose at least $31.5B in a year by failing to share known information.  When it comes to organizations, KM is a platform where all information from the experience and expertise of the company workers can be found in a structured manner to help the company avoid unnecessary efforts.

What are the Types of Information in an Organization?

What are the Types of Information in an Organization

In the most general sense, there are two types of information that can increase productivity if managed properly:

1. Explicit Information:

This type of information is formalized and well documented.  It is easy to identify, store, and retrieve when needed.  One common example of explicit information is the common checklist that the sales team uses to access the needs of clients, the questions to be asked, and requirements to be inquired about.  This is very easy to manage with a KMS and not as needed as tacit information.

2. Tacit Information:

This refers to intuitive, experience-based learning that is rarely formally documented.  It is very personal in nature and depends on context, and thus is relatively harder to implement in KMS.  It is regarded as more worthy than explicit information and usually leads to innovations and profits.  It is most commonly seen as the magic of some workers, who can perform certain tasks better than others.

What are some Real-Life Examples of the Benefits of Knowledge Management in an Organization?

Lewis Platt, the former CEO of HP said: “If HP knew what HP knows, we would be three times more productive”.  Let’s look at the case of Toyota, which has its headquarters in Japan, and more than 300,000 staff members across the globe.  With such vast geographic distribution, Toyota is still at the top because of its perfect KMS.  For Toyota, the Job Instruction (JI) document is their KMS to standardize procedures, improve safety, and ensure quality.

Important steps, Key Points, and Reasons in the JI, every employee in Toyota perfectly plays their part in production lines.  Having its roots since WWII, the Toyota Production System (TPS) is recognized internationally to give Toyota its great standards and profits.

What are the Benefits of a Knowledge Management System to an Organization?

What are the Benefits of a Knowledge Management System to an Organization

1. Organize all documents

The first and foremost benefit of a KMS to an organization is the proper organization of all documents like company procedures, SOPs, checklists, etc.  so any of your workers can easily find these documents easily within a couple of clicks.  All of your important documents are stored in one place and organized properly under appropriate headings, which makes it impossible to misplace any document and things become hassle-free for both you and your workers.

2. Easily find any information

If you have a lot of staff members who are working from multiple locations, then this benefit is the most useful.  Usually, if any staff member has any questions, they have to ask experts through email, phone calls, or text messages, and in, either way, there is a lot of back and forth correspondence.  If all your information and expert knowledge is stored in one place that is easily accessible by all staff members, then a lot of time is saved in recreating existing knowledge.  The experts have more time doing more research, which is what increases profits.

3. Improve decisions by easy access to expert knowledge and leading practices

With a good knowledge management system, all employees are able to make quick and informed decisions.  The employees have access to common decisions made by experts along with reasoning, and thus their decisions are more rational and prompt.  With this ability to make well-informed choices, the employee and customer satisfaction is increased.

4. Improve innovation through global collaboration

When any company is spread globally, its experts and their knowledge are also spread out and with this innovation and ideas are slow and insufficient at times.  In such cases, if all experts can collaborate and share their knowledge with each other.  With this kind of collaboration, breakthrough innovation is possible.

5. Learning from mistakes and avoid redundant effort

Reiterating Toyota’s example, their JI has information and common decisions enlisted along with appropriate reasons, so the same mistakes do not occur more than once and lessons are actually being learned from mistakes.  With such a knowledge-sharing platform, the redundant effort is avoided and productivity is increased.


1. Why is Knowledge Management in an organization important?

Answer: KM plays a very central role in the growth of any organization. As any company expands, a lot of information is gained on a daily basis and if this information is not properly managed, nothing useful comes out of knowledge. Thus it is crucial to properly store that information so that redundant mistakes are avoided, and the information is accessible to everyone.

2. WWhich of the following statements is true: KMS helps companies as ___

A) allows distributors to work within the company premises

B) allows suppliers to work according to the organizational policies

C) enables workers to solve problems and rectify mistakes later

D) improves process quality and increases team strength

Answer: The following observations: option C and D both make sense, but Option D is the correct answer as KMS does more than solving problems and rectifying mistakes later; it also increases the quality of process within the organization and team strength.

3. What are the top advantages of implementing a KMS within the organization?

Answer: Some of the prominent advantages that can be seen with the implementation of a KMS are:

  • More efficient work processes
  • Quicker and improved decision making
  • Increased collaboration and information sharing
  • Reduces redundant efforts
  • A streamlined onboarding process for new hires
  • Higher employee satisfaction and retention rates


We hope this article helped you get a better understanding of Knowledge Management and help you switch your company resources to an online KMS.  If you want to switch to a KMS but lack information regarding the same, please read our article on 2 major types of KMS as well as our other blogs, in which we try to share as much information as possible regarding the proper management of all known information.

If you have any more questions or concerns, please feel free to contact us and share your thoughts.


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