Getting to Know You

It’s time to trim down and cut costs in your organisation, but where?

Some say you should tighten the belt around projects that don’t show immediate profitability. In professional services, that’s likely to be Knowledge Management (KM). True, investment in KM may be the key to long-term success, but in the short-term, perhaps the high salaries of the specialised KM executives are too tough to manage.

But others argue that when it’s slow-going externally, it’s time to turn to internal strengthening. In that respect, KM is more of a preventative measure, because it will pay off later by preventing another slump.

What could explain this KM dichotomy? Elie Ofek (Assistant Professor of Business Administration, Harvard Business School) and Miklos Savary (Associate Professor of Marketing, INSEAD) say it may stem from the two conceptual categories of KM: Knowledge Exchange and Knowledge Creation. These two branches have scale economies of different types with varying implications for competitive dynamics.

KM processes may facilitate Knowledge Exchange in the firm, leading to more efficient operations and lower costs, i.e. supply-side scale economies. They can lower the firm’s marginal costs and increase efficiency, making it easier for professionals to access and adapt previously-generated solutions. Many firms do this in a centralized (through electronic documents of client and project information) or decentralized way (through communication, directories, and general sharing of information among colleagues).

Complete article at Knowldge. Insead

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