Although the terms “information” and “knowledge” are often used interchangeably, there is a clear distinction between information and knowledge. Information is a flow of messages, while knowledge is created by that very flow of information and is anchored in the beliefs and commitment of its holder. Traditional management models focus on how to control the information flow and information processing within the organization. This view, however, fails to capture the essence of organization as knowledge-creating entity. What “knowledge management” should achieve is not a static management of information or existing knowledge, but a dynamic management of the process of creating knowledge out of knowledge. Hence one can argue that organizational knowledge creation is a continuous self-transcending process, which requires a new kind of management that goes beyond the traditional models of “management”.
According to Peter F. Drucker in The New Realities, “Knowledge is information that changes something or somebody—either by becoming grounds for actions, or by making an individual (or an institution) capable of different or more effective action”. Knowledge is viewed as a collection of facts, ideas, learning’s and policies, practices and a lot more. Knowledge can also be defined more narrowly as agreed- upon explicit or formal facts, rules, policies and procedures, whereas skills are seen as information processing competencies that can generate explicit knowledge. Skills are learned by doing; knowledge is learned by studying or investigating. Knowledge can be classified as “tacit” knowledge that is personal (i.e. knowledge that cannot be expressed and communicated) and “explicit” knowledge that can be codified and expressed in a human or formal language.
Knowledge management is such a preposterous, pretentious and profoundly confusing phrase that many of those who really understand KM—including some of the field’s pioneers-refuse to use the term. If there is anything that those experts do agree on, it is that knowledge management is not about managing people in any traditional sense. Nor is knowledge management really about managing knowledge. They prefer terms such as knowledge sharing, information systems, organizational learning, intellectual asset management, performance enhancement, etc.
Knowledge management refers to strategies and structures for maximizing the return on intellectual and information resources. Because intellectual capital resides both in tacit form (human education, experience and expertise) and explicit form (documents and data), KM depends on both cultural and technological processes of creation, collection, sharing, recombination and reuse. The goal is to create new value by improving the efficiency and effectiveness of individual and collaborative knowledge work while increasing innovation and sharpening decision-making.
KM is the collection of processes that govern the creation, dissemination and utilization of knowledge. In one form or another, knowledge management has been around for a very long time. Practitioners have included philosophers, priests, teachers, politicians, scribes, librarians, etc. The importance of knowledge as a key source of competitive advantage is now well established in management studies. Knowledge is undoubtedly an indispensable resource to create value for the next generation of society, Industries, and companies. Yet, despite all the discussions and attentions in both the academic and business worlds, very few have articulated how organizations actually create and manage knowledge. Many companies still seem to remain locked in the phase of building efficient and effective information technology (IT) systems when they try to “manage knowledge”.
Ultimately, knowledge management is really just a way of looking at the world of business. It’s a realization that who and what are assets of the organization. And just like building, operating and managing physical assets, knowledge assets need to be managed for the greatest possible return on investment.