How Knowledge Management Can Benefit Your Small Business

Any organization will benefit from their employees’ individual and collective knowledge, which evolves with the organization. The larger the size of the company, the more important it is to have a solid knowledge base; but it’s not just the large organizations that will benefit from having a knowledge management system.

Imagine starting your own company. You have a small number of people each bringing in their own knowledge and experience into your budding enterprise. However, one of them has informed you that they are leaving your company. They will take with them their expertise when they leave. Imagine the hole their leaving will cleave into your company. This is where knowledge management comes in.

What is knowledge management?

According to Tom Davenport, “Knowledge management is the process of capturing, distributing, and effectively using knowledge.” It is the process of collecting, creating, maintaining, and using knowledge within an organization. The idea started in the management consulting sphere when the internet first started gaining steam. With the advent of the internet came the intranet, an organization’s in-house subset of the internet, and with this came the realization that the intranet made data and knowledge more accessible to people within the organization.

Knowledge management concerns itself with gathering, storing, and transferring knowledge. The process itself may seem simple, but there are factors to consider. One of which is the different types of knowledge.

The Main Types of Knowledge

There are two main types of knowledge. Knowing the difference between the two is an important step of knowledge management.

Explicit Knowledge

One type of knowledge is explicit knowledge, also known as formal knowledge. This type of knowledge is easy to articulate, write down, or codify. This knowledge is the type you find in textbooks, manuals, job aids, graphs, reports, even instructional videos. It is objective, technical, and logical.

An example of this is a work manual. A work manual will have a list of steps to follow in order to accomplish a certain task. These steps can easily be taught to others and followed to the letter. One does not necessarily need experience (unless the manual is specifically for experienced individuals) in order to follow the steps.

Tacit Knowledge

Tacit knowledge, on the other hand, is something not quite easy to articulate or transfer. This is the type of knowledge that is gained through experience and daily activities. Where explicit knowledge is objective and technical, tacit knowledge is subjective and experience-based. This knowledge is difficult to store and learn just by reading a manual. This knowledge is intuitive and based on one’s cognitive process and observation.

One cannot teach a person to ride a bike by making them read a manual. The learner has to get on a bike and learn how to balance. There is no way to actually write down the instructions on how to balance on a bike. Hands on experience is needed to learn this skill.

In order to pass this skill, the trainer needs constant interaction with the trainee while the trainee gains experience. It will take time and an establishment of trust for the knowledge transfer of this type of knowledge to be successful.

There is a third type of knowledge that people also consider when it comes to knowledge management. It is called implicit knowledge. This is the practical application of explicit knowledge. These are skills and best practices that can be transferred from one job to another. Some people use explicit and implicit knowledge as synonyms, while others believe they are entirely separate entities.

Knowledge Management Systems

In order to apply knowledge management, you would need tools. These tools are known as knowledge management systems or knowledge management tools.

A knowledge management system is an IT system that stores and enables retrieval of knowledge. It could be anything from knowledge bases like Slab, to artificial intelligence and simulation tools.

The purpose of having these systems is to ensure that the employees all have access to the same information across the organization. These knowledge management systems are a good means of housing different types of information under different categories. It also makes searching for and retrieving information easier. Ensuring that the information in the system is accurate and up to date is also easy when you use a good knowledge management system.

How knowledge management works

Knowledge management revolves around the accumulation, creation, distribution, and application of knowledge.

First, knowledge is acquired. This could come from an employee’s expertise, their training, or from their schooling. It could come from a mandate, a trend, or a new law.

We then proceed to categorize knowledge — whether it is explicit or tacit. Each type demands a different way of processing and imparting the knowledge.

Once the knowledge is properly identified, it is codified in ways appropriate to the type of knowledge we have. Explicit knowledge is stored as written or audiovisual material, and tacit knowledge is imparted through observation, long-term contact, and training.

Afterwards, the codified knowledge is then stored in a knowledge database. It can be as simple as a room full of files or as complex as an AI run by an entire IT department. The important thing is that data needs to be accessible and easily retrievable.

Knowledge is then imparted to your organization, customers, stakeholders, etc. where it will be used in the regular cycle of business.

As you conduct your daily business, you gain new knowledge and gain expertise, which you then classify into either explicit or tacit knowledge. And the cycle starts all over again.

Why is knowledge management important to small businesses

When you have a small workforce, every single one of them is important. That is not to say that employees in bigger organizations don’t matter. It’s just that a smaller workforce means that when one leaves, the absence is felt tenfold.

Retaining Knowledge

So, going back to the situation above, when one of the people you hired decides to leave the company, they take all their knowledge and expertise with them. This leaves a gaping hole in your knowledge base. Now, imagine if your organization did not have a knowledge management system in place. That is to say you have no one repository for your manuals and other knowledge and training materials. Or worse, you have no clear written instructions or job aids. Your production will be adversely affected. Your service to your clients will decline and customer satisfaction will take a huge hit, not to mention the adverse effect this will have on your revenue. Everything will grind to a halt until you find a suitable replacement. All because when that one person left, they did not leave an account of their knowledge behind.

The way small businesses are run may differ from larger organizations but the benefits of having a knowledge management strategy in place remains the same: knowledge management helps develop and retain knowledge within an enterprise and positively affect revenue and customer satisfaction.

Fostering a Learning Culture

Having relevant and up-to-date information necessary to your organization at the fingertips of your employees will foster a learning culture. Having a learning culture will equip your employees with knowledge and skills needed to carry out their jobs and follow best practices. This also ensures that updates to any process, knowledge, or expertise are preserved, codified, and imparted to your organization. This fosters growth, not just career-wise for your employees, but growth as a company. Your organization will work like a well-oiled machine even in the absence of your SMEs, and when someone leaves the company or moves to a different department or role, their knowledge is preserved within your knowledge management system and accessible to their replacement and the team that needs it.

Improving Customer Satisfaction

In terms of customer satisfaction, when all your employees have access to the data that they need, they are able to address customer concerns expediently and efficiently; and if they go the extra mile and ask about customer experience, take that data down, and plug it in the system, your organization can take that information and use it to provide better service. These things will make your customers happy, and happy customers are repeat customers.

The power of a good recommendation helps build businesses. This could expand your customer base.

Cutting cost

Revenue-wise, having clear, updated, and codified data that is easily retrievable can help cut down on costly mistakes. Knowledge management bases can help keep track of resources, which things are unnecessarily duplicated, which processes can be optimized, and where the company is spending too much or too little on. All these can help an organization form a business strategy that will help them cut cost and boost sales. Ready and reliable data is as invaluable as knowledge and expertise.


Knowledge management benefits not only large scale organizations, but small companies as well. It is important to have a solid knowledge management strategy in place to keep your company running like a well-oiled machine. Knowledge management systems can help your enterprise increase your revenue, foster a learning culture, widen your customer base, and promote employee engagement. All in all, having a good knowledge management system in place is a good investment strategy.

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