Business processes, standard operating procedures and best practices are stored within a company in explicit, implicit and tacit manners. The first two--explicit and implicit--allow companies to externalize and to transition knowledge from one generation to the next while the latter--tacit--poses a difficult quandary for businesses: How to externalize and pass along insight, experience and intuition? Knowledge management comprises several innovative methods of capturing the information businesses need to pass on in order to survive and grow in competitive markets.
The first step to understanding how knowledge management has effected the operation of business is to define the three elements at the core of a company. Processes are the step-by-step instructions on how to achieve a particular goal. Think of a process as the directions for generating a product or service. Standard operating procedures (SOP) are the manner in which the directions are performed. The SOP instructs the employee on the subset of tasks needed to complete the larger one. Best practices can be explicit or implicit ways of achieving business processes or standard operating procedures.
The best way to clarify these concepts is by developing a hypothetical example and follow a company toward their goal of creating a product. ABC Corporation is in the business of manufacturing widgets. The business process for manufacturing and selling widgets is a simple one. Steel is received from suppliers, melted down and molded into widgets. Once the widgets are manufactured they are shipped to awaiting customers. The standard operating procedure (SOP) for receiving steel is to check the quality of it before accepting the shipment. Another SOP is to have the furnaces at an exact operating temperature. Business processes and SOPs are written documents to ensure standardization and are easily verified.
Best practice for checking steel is to do it before the shipping company unloads it. The best practice for achieving the proper operating temperature in the furnace is to gradually increase the temperature. Best practices can be expected to adhere across an industry, so they can be expected to be written in some form of document. Some company specific best practices applying, for example, to the manufacture of widgets, may not be written rules but ways of operating learned over time (tacit knowledge).
Explicit knowledge is information that is written down in a documented form, such as documents for business processes or SOPs. Explicit knowledge is information easily passed throughout the organization. Implicit knowledge is more complex to understand. Implicit knowledge:
may be present in ... explicit and tacit knowledge but needs people to extract it. (David J. Skyrme, "Tacit and Explicit Knowledge")
Implicit knowledge is information that is implied by explicit (what is documented) or tacit (what is known) knowledge and that can be known if discovered through insight or analysis. It is therefore knowledge that is not written, but could be written and documented. For example, within a given company, it may be that company-specific best practices have been passed orally but could better be documented in...
The third component is tacit knowledge, which is information "embedded in the human mind through experience and jobs" (Tallinn University, Estonia, "Tacit and Explicit Knowledge") and not easily transferred from one generation to the next. This can be "Personal wisdom and experience, context-specific, ... insights, intuitions" (Tallinn). It can be difficult to capture and record such knowledge because it is very particular to the experience and interpretation of the individual.
Knowledge management is an understanding in administrative leadership that there exists information within a company vital to its survival that must be passed generationally. Knowledge management has created an atmosphere of innovation where such information can be better shared. The technology revolution in business has spurred ways to capture, document and share information. Companies can create online articles or collaborative storehouses of information that can be accessed from anywhere. This cloud-based knowledge sharing allows people to share information in a variety of ways, such as blogs or video uploads. Additionally, companies can initiate mentor programs designed to pass along information directly from one person to the other. Similarly, cross-training employees in different aspects of the company can produce benefits by applying different knowledge standards to problems. Although the latter are more traditional in nature, they can be very effective as well.
The social environment of the company will help determine what methods work best for the employees. In larger companies, one method may not work for every department involved. Knowledge management is designed to promulgate sharing of information and it must remain a fluid concept to be a useful tool. By recognizing the explicit, implicit and tacit knowledge within a company, knowledge management can focus on allowing the “owners” of information to find the best use for and disbursement of it.