American economist Kenneth J. Arrow, the youngest economist ever to win a Nobel Prize in Economics and Robert Merton Solow, another Nobel Prize winner in Economics have been among the first ones in recent history accredited with their sagacious observation that growth and productivity in an economy were not functions of capital and labour alone. There was a substantial differential they attributed to the knowledge content of an economy. In remarkable conformance to their observations, today knowledge-intensive high-technology industries are the biggest contributors to long-term growth. Both the top developed economies, the U.S. and China, testify this accounting for 33% and 10% of global output of knowledge-intensive services respectively.
Any era of globalization like ours is invariably marked by rapid intensification of economic activity integrating world markets. While threat of global trade war triggered by protectionist policies of few countries looms large every now and then, there is an emphatic counter to that threat through reductions in tariffs and non-tariff barriers and market deregulation initiatives in many other countries. Concurrent deregulation of financial markets and reduction of barriers to foreign direct investment (FDI) is leading to further integration of world markets through increasing FDI and capital flow into developing countries. A prerequisite and consequence of this rapid global economic integration is a tremendous increase in information exchange and knowledge sharing among countries creating a world of knowledge economy.
With sophisticated tools and advanced technology for collecting, storing, retrieving and processing data into useful information, analyzing and interpreting that information to develop a shared common understanding across stakeholders and finally putting that understanding to use by applying it to meet business objectives, Knowledge Management is one of the top investment preferences. An investment in Knowledge pays the best interest, said Benjamin Franklin.
The various forms and modes of this investment range from organizing series of training programs conducted by Subject Matter Experts (SME) for intended recipients in respective areas to subscribing to various Knowledge Management repositories or portals to developing such repositories in-house to creating various Knowledge Assets viz. process maps, research papers, patents, copyrights and intellectual proprietary rights, standard operating procedures (SOP), design blueprints, root cause analysis (RCA) documents, software, reusable codes, programs and utilities, etc. to signing Knowledge Support Services contracts with Consultants to various other types. The particular objective of a specific intended benefit is more often than not the deciding factor in selection of the type of investment in Knowledge.
The famous Management Consultant, Thinker and Author Peter Drucker, popularly known through the past few decades as Father of Modern Management Thinking said, “Knowledge Management is the co-ordination and exploitation of organizational knowledge resources, in order to create benefit and competitive advantage.”
For business, the primary objective of profitability comes through creating operational efficiency and competitive advantage. Therefore, an investment in Knowledge Management in business should have its effectiveness correlated to the benefits of increased operational efficiency and competitive advantage it promises to bring in. And they should be measurable. Organizations in developed nations have accelerated expansion of their business operations globally due to knowledge-intensive strategies.
Organizations need to link budgetary allocations for knowledge programs to deliverables across functions and roles. Those deliverables, in turn, need to be link measurable performance parameters to appropriate rewards. And the rewards could by themselves act as incentives to gain more knowledge instead of mere monetary or material gains. This cyclic process of seeding knowledge to extract tangible business benefits, to meet or exceed business targets of growth and profitability which in turn will be employed for knowledge development and enhancement will foster a culture of knowledge in an organization or institution, thereby strengthening it permanently.
Knowledge Management is about empowering the right people with right knowledge assets to create value. It relies on intellectual capabilities instead of physical inputs or natural resources. Therefore, economic considerations, the kind of which apply to saving costs in money, materials or labour resources, should not be applied to knowledge, especially in decisions of investments therein. To translate knowledge into wealth and economic prosperity, organizations need to invest in creating knowledge ecosystems which stimulate knowledge-based economic activity and creation of new knowledge, both of which have lasting positive impact on economic growth.