Success with the Fourth Factor

Modern industrial nations are currently experiencing a structural change from work-intensive to knowledge-intensive operations. More and more business processes in this age of globalized markets are making use of the resources and opportunities offered by state-of-the-art information technology. Customers today want to have constant access to market-relevant information. This represents a “particular challenge for SMBs in the face of global digital networking”. This was the conclusion of a study entitled “Wissensmanagement in mittelständischen Unternehmen” (“Knowledge management in small and midsize businesses”) published by business consultants KPMG on behalf of the German Federal Ministry of Economics. Economists therefore regard knowledge as the fourth production factor alongside the traditional factors of land, labor and capital.

Organizing knowledge networks

The purpose of knowledge management is to link the company’s intellectual capital ever more closely to the value-adding processes and thus to ultimately accelerate innovation processes and raise productivity. BITKOM, the industry association, believes that knowledge management – functioning as a “cross-section technology” – can contribute significantly to adding value to companies and organizations. “It is therefore becoming increasingly important for companies to record and network the knowledge possessed by their employees and to make this accessible to everyone involved”, explains Peter Bross, BITKOM’s CEO.
SMBs are not a homogenous group and therefore have “very different requirements when it comes to knowledge management concepts”, state Professor Paul North and Laura Lamieri from the Technical University of Wiesbaden in an article for the magazine “Wissensmanagement” (“Knowledge Management”). Management consultant Brad Hoyt adds that knowledge in companies and organizations, whatever their size, assumes very different forms and can include knowledge about products, processes and competitors, technical knowledge and knowledge about customers.
Employees therefore need unhindered and constant access to all information and sources of knowledge within the company if KM projects are to be successful. According to Hoyt, this requires firstly that everyone uses a common “language” (taxonomy) and that use can be made of collaboration tools such as e-mail, synchronous and asynchronous discussion tools or (desktop) video conferencing. The second stage involves actually distributing knowledge via these channels. This can be done in the form of best practice transfers or within project teams working with a shared database.
However, all this requires that companies have a knowledge culture in place that channels, organizes and qualifies employees’ experience (“implicit” knowledge) and focuses it on the need in hand. Peter Heisig from the Benchmarking Information Center (IZB) of the Fraunhofer IPK therefore advises SMBs to take stock of their existing business processes (knowledge management audit), beginning with a pilot project which is either associated with the company’s core area(s) of expertise, or that allows improvements to be implemented quickly so that these can be used for internal marketing.

SMBs and the thirst for knowledge

SMBs have been quick to recognize the improved market opportunities that come from using a KM strategy. The KPMG study quoted above reveals that 20% of the SMBs included in the survey have already introduced knowledge management and that 10% of them have introduced KM in some areas. 26% are planning to introduce KM, while 24% have looked into the subject of knowledge management and are interested in introducing it. There is therefore very wide acceptance for knowledge management and many SMBs already have the requirements in place for KM in the form of digital archives, stores, databases and basic and advanced training programs. There are still some shortfalls in strategic planning, structure and coordination and in defining corporate goals such as customer focus, quality or market leadership that KM is intended to achieve.
The KPMG study and a study by the Fraunhofer IZB both come to the conclusion that, as things currently stand, SMBs are primarily still using knowledge management technologies to maintain or enhance the quality of their products. Both studies also attach particular importance to knowledge management in companies (around 40% each) if this enjoys the acceptance of customers and markets. There is therefore an increasing trend to define knowledge management as a strategic planning tool for successfully enhancing the relationships between companies and employees, between employees themselves, and between companies and customers/suppliers. This fits in with the conclusions of the Gartner market research company in the US and the Fraunhofer IAO (Institut für Arbeitswirtschaft und Organisation, Institute for International Engineering) which, according to Gartner analysts Kathy Harris, Esteban Kolsky and James Lundy, see the marriage of customer knowledge and CRM as a “critical factor” for long-term success in customer relationship management.

Knowledge management in a state of flux

The META Group thus concludes that the knowledge management market too is in a state of flux. This market research company believes that the trend is towards Internet-based and multifunctional information platforms that bring together a whole array of individual systems (portal solutions, Content Management, Search & Retrieval or e-learning), something that the META Group experts refer to as an Enterprise Information Portal (EIP). “The most important function of such a portal”, states Delphi Group Vice President Nathaniel Palmer, is collaboration. A Delphi Group survey discovered that as many as 75% are of the opinion that “collaboration should be part of every portal offering”. For this reason, former META Group analyst and now Braiconn consultant Marc Tenbieg believes that, at the current time, portals are unquestionably the most important strategic corporate solutions when it comes to knowledge management.
These requirements are met by solutions such as mySAP Enterprise Portal 6.0. In addition to the extensive portal technology, the portal solution also supports comprehensive knowledge management functions that transform unstructured information into usable knowledge. These include an intelligent search engine complete with text mining functionality and automatic classification. Groups and communities can exchange ideas and knowledge and share management of task lists in what are known as virtual collaboration rooms. Real-time collaboration through instant messaging or Web-based application sharing tools is equally important for global knowledge exchange.

What about knowledge management in the future?

However, SMBs have to do more than just manage their knowledge worldwide. According to Fraunhofer IAO researchers Markus Korell and Dieter Spath, knowledge management of the future will be extended beyond the boundaries of a particular company and, in the form of “Customer Knowledge Management (CKM)”, “will actively and systematically integrate the market and/or customers into the knowledge management system”. Enterprises must also endeavor to introduce KM processes for the purpose of organizing the “vital operating asset that is knowledge”, obtaining access to this and ensuring continued investment in it. This will be updated, expanded and condensed by incorporating information, experience, ideas, values and a networking of existing information using IT technologies. However, knowledge must be viewed as a strategic corporate asset if knowledge management projects are to be successful. SMBs fulfil two important requirements in this regard – they are highly flexible and learn quickly. However, they would be best advised to follow the advice of Johann Wolfgang von Goethe, who some 200 years ago, wrote: “Knowledge is not enough in itself, you also have to apply it”.

Further information:

Trade fair:,”Knowledge Management” workgroup)
Studies: (KPMG study),,,,

Dr. Andreas Schaffry
Dr. Andreas Schaffry