What is knowledge really and how does it differ from data and information? Wikipedia provides a rather good definition:
Knowledge is a familiarity, awareness or understanding of someone or something, such as facts, information, descriptions, or skills, which is acquired through experience or education by perceiving, discovering, or learning.
Knowledge contains, but is not limited to data and information, since it has a wider scope extending to skills and understanding. Interpretations, values, experiences and views developed through expertise are all part of knowledge. Knowledge is so multi-dimensional that it may be hard to put it into words or pass on to others. That’s why in organizations it resides not only in documents, databases and tools, but is also included in organizational culture, ways of working and in processes and practices.
As the focus of competitive edge has shifted from tangible assets to intangible, the significance of knowledge as a valuable resource and as a unique competitive factor has increased. Nowadays, products alone wont guarantee success and companies must constantly reinvent themselves, for example through more efficient production methods, shorter delivery times and through fast-paced product innovations. In addition, service is more or less always included with the product, as companies are offering whole solutions opposite to just offering the physical product. It is getting increasingly difficult to compete just with products alone, since they can often be easily copied, but a rich knowledge reserve and skilful utilization of this knowledge provide companies with a strong competitive edge.
It has become a rarity for a company to exist in a completely stable environment. Changes seem to happen in continuously more rapid-paced cycles. In order to successfully sail these stormy seas, companies must have the ability to endure uncertainty and to adapt themselves to changing circumstances. This requires not only accurate knowledge about markets, economical trends and competitors but also the skills to use this knowledge to create business benefits. Careful monitoring of the business environment allows company to foresee changes and their possible effects thus making it possible to adjust strategy accordingly. A strong vision and understanding of the surrounding dynamics makes it possible to turn threats into opportunities and challenges into victories.
In conclusion, intangible assets need to be nourished and valued. The knowledge of a single employee should be harnessed and made available for the whole organization. The next posts in this series will provide means for this as we discuss knowledge management.