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Types and Importance of Knowledge in Business

All businesses develop knowledge over their lifetimes. Maintaining and transmitting this knowledge isn’t always easy, but knowledge management tools have revolutionized the process. So if you’re going to use such tools, you should understand the types and importance of knowledge in business.

Types of Business Knowledge

The simplest type of knowledge is the explicit kind. Explicit knowledge is anything you can quickly write down the steps for doing. For example, if your business uses certain accounting practices, there should be an explicit equation for calculating free cash flow.

Implicit knowledge tends to represent best practices and often involves the right way to apply explicit knowledge. For example, suppose your HR department has explicit practices for assessing candidates. There must also be implicit knowledge about when to address concerns, inconsistencies, and other potential problems. Otherwise, a robotic approach explicitly following the outlined practices could lead to poor hires.

Finally, there is tacit knowledge. This is the most complicated type to share with others because it often generalizes key skills. For example, if a technician at an IT company has a process for assessing system failures, there’s often significant tacit knowledge in how they sniff out issues.

The Importance of Managing Knowledge

Many businesses assume that employees will pass knowledge down to coworkers and new hires. However, they often fail to take a direct and explicit approach to this problem. Consequently, the retirement of a key employee could mean the disappearance of massive amounts of institutional knowledge.

A company secretary who has always maintained records efficiently might go away, for example, and the next person in the job might not know how the previous individual did it. Instead, the new hire has to relearn skills and develop new systems, which will likely cost your business time and money.

Knowledge management means to defeat this problem. It requires a company to direct its employees to contribute to a database of knowledge. Explicit procedures go on record, as do best practices. People also can contribute tricks to the trade.

Anyone who needs to figure something out can quickly refer to the management system. The system will tell them what to do if a new hire needs to do something as simple as changing the printer’s ink.

Benefits

A managed knowledge database can inform the hiring process. If you need to assess a candidate’s skills, you can compare their resume and interview responses to what the knowledge database says. You can then rule out folks who display significant mismatches and focus on prospects representing the best matches.

In some cases, a business may need to close knowledge gaps. For example, following the collection of the team’s knowledge on a topic, you might find something lacking compared to industry practices. You can then order training to fill the gaps. This can radically simplify transitions due to changes in personnel or practices. You can check out Verint to learn more about Knowledge Management solutions and more.

The efficient transfer of knowledge is critical to business success. By moving to a managed model, a business can reduce critical knowledge gaps.

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