Knowledge Management for SMEs

Knowledge Management for SMEs

According to the World Bank, small and Medium-sized Enterprises represent 90% of businesses and are responsible for 50% of employment globally. Its data also shows that formal SMEs contribute about 40% to the national GDP. While large enterprises might be more familiar to us, by virtue of their size and popularity, SMEs are closer and arguably more ubiquitous.

Knowledge is one of the most important assets for any firm, but its management has often been seen as a luxury reserved for those that are macro in size and can afford to do the big and fancy stuff. “Knowledge” as a word doesn’t even ring a bell for most SME teams. This is because one key building block for developing Knowledge Management (KM) systems is digitalization, and its uptake among SMEs is still far behind when compared to larger enterprises.

That being said, COVID-19 gave an unprecedented push to these enterprises which saw their engagement of digital tools and processes increase as they looked for alternative ways to reach their customers. Using digital channels like ecommerce sites and social media to sell was one of the major ways this happened.

The premise that KM is only be useful to big business is wrong, and answering 5 questions explains why.

Do SMEs Have Knowledge?

Everybody does, or at least, the raw material for it

A byproduct of digital processes and interactions is data, which can be translated into information, and then knowledge. While this is one of the tidier or more direct ways that we find knowledge or the raw material for it, it’s not the only source. Determining whether one has knowledge rests on understanding what knowledge is in the first place.

Knowledge is differentiated from data and information. Data refers to facts and details, information to refined data, and knowledge to information that is interpreted and contextualized. Therefore, there is a flow from data to information to knowledge; each block is important in the knowledge process and its impact on business performance.

Knowledge then is simply what we know. It is beyond possession of data or information, to an awareness that means it is being put into use in one way or another. It involves skills that employees have, resources that organizations use to get work done, and even something as basic as knowing what time your business might experience the most traffic in a day. Whether formal or informal, all businesses technically possess knowledge in some form. If they didn’t, the business wouldn’t exist or exist for very long. However, KM’s goal is to search out that knowledge and find ways to leverage it in a way that produces or multiplies value and results.

We are getting to that bit.

A Knowledge Management Approach for Small Medium Enterprise, Neliti.

Why Should They Care About KM?

It is capable of improving every aspect of a business and ultimately its bottom line

Organizations are built on and improved by what is known. Whether intentional or not, what we know about how our business operates and the ecosystem around it shapes how we do business. Processes might start off being based on only standards or a sense of how things are done, but they eventually evolve to include unique experiences, whether direct or otherwise, and they most likely continue to change. This includes how we determine opening to closing hours, the roles assigned to staff, how team members go about their tasks, and why a particular machine was substituted for another one, even if without context, both might seem to have little difference between them.

KM is a strategic approach to finding and bringing together the scope of information available in an organization so that it is accessible to those who need it and becomes valuable not only to who or where it originates from. The point is to make the business better, starting from how it operates, to the results it is producing. Mohammed Samir’s research on KM and SMEs in Egypt categorizes organizational performance into financial and nonfinancial performance. Nonfinancial performance refers to innovativeness, competitive advantage, and customer satisfaction.

KM has been found to have a positive relationship with both financial and non-financial performance, in Samir’s work and many others. The research shows that KM contributes to;

  • Organizational success through growth in sales, fewer losses, increased productivity, and process improvement
  • Employee development (skills, learning, and staff retention)
  • Improved customer satisfaction (establishing loyalty from the customer and a positive reputation for the business)
  • Innovation
  • Creativity
  • Improved external relationships with other firms.

Nonfinancial performance translates into financial performance.

Other factors necessitate the adoption of KM practices by SMEs today, and Prof Tsui of Kong Kong Poly University highlights them as pull factors, push factors, and challenges ahead.

What can they do with it?

Document, Store, Share, Use, and Manage it.

Knowledge is usually categorized as tacit or explicit. The former refers to knowledge that is documented, while the latter is that which is known by individuals, usually based on personal experiences (learning, skills, etc.) that are unique to them and are not documented. The main difference is therefore the state in which the knowledge exists; in people’s heads, or also in a documented form that others can access and make use of.

It is based on the understanding of what knowledge is and its forms that we then can understand what is to be done with it. These are the basics;

Document: It is important to transfer head knowledge into something that is accessible to other people without the hassle of having to seek it out from the person or persons who know it. This applies to things like business processes, and other things that factor into how the job gets done in an organization. Documentation can mean getting it down in text documents (digital these days), or other file formats such as audio or video, depending on the kind of knowledge that is being recorded.

Store: Storing documented knowledge is important because it is the path to organizing knowledge and also facilitates how it is shared. Because the point of KM is ultimately to enable sharing and use, how it is stored will logically follow how it is used, and by who. We will get to that shortly.

Share: This is where we begin to see some sort of demarcation between how we treat tacit and explicit knowledge. What is known is to be shared with those it will be relevant to, and possibly those who are curious, but the former are the primary recipients. Tacit knowledge sharing can be as simple as granting access to whatever documentation that houses it. Explicit knowledge on the other hand can go through two major pathways.

The first is documentation → sharing. The other presents more opportunities for some of the benefits of KM, and that is through person-to-person or person-to-person sharing. Knowledge can be shared through a number of approaches, all of which involve people/employees interacting with each other. This is usually referred to as personalization, and it is important for problem-solving, innovation and learning, and team building in an organization. Plus, it doesn’t have to be too formal, as it’s best to employ sharing practices that integrate easily into daily routines and encourage people to share. One of the ways this happens is through water cooler chats, so named for when employees bump into each other at the water cooler and get talking. In KM practice, it is generally seen as casual conversations that team members have with each other, and it doesn’t have to be about work. MIT Research has shown that this practice boosts productivity by 10–15%.

Use: The point of knowledge is ultimately that it can be used. It is up to people to translate what they know into practice in order to make the business better. If you create training manuals, organize them, give proper access to new employees or those coming into new roles, and they don’t actually read and align their work with the manual, then the purpose is defeated.

Manage: This is what makes all the pieces fit together, creates systems that make the above processes work seamlessly, and draws the lines (straight or squiggly) from knowledge to value. It is what KM practice is about.

How can they do it?

Tools, Practices, People. These are the Pillars

What SMEs (and any organization really) can do with knowledge is enabled by tools, practices, and people. Tools refer to applications and software that enable different what-to-dos like google drive for documenting, storing, and sharing; and zoom for remote meetings and sessions for sharing and finding ways to use knowledge through brainstorming. Practices refer to all the approaches for what-to-dos, and they can be enabled by tools. An After Action Review is an example of a practice.

Then there are people, without whom there would be no KM, or organizations to start. Everyone is part of a KM strategy, but their roles and responsibilities differ. Standard practice is to have KM point persons, with one who heads its implementation. Depending on an SME’s size and its business needs, it may or may not have a role specifically for KM. It can however select personnel whose role(s) can integrate KM functions, and they can get up to speed on how to get the job done by using a vast and still-growing body of knowledge found online, and possibly in-person training from external experts.

What can’t you do?

Inhouse personalized systems- but you don’t have to.

KMS, like most IT-related operations, has traditionally required firms to build systems and infrastructure in-house. It still makes sense for some today, usually large-scale firms. However, it is both impractical and unnecessary for SMEs. Impractical because they do not have the capability (financial and human resources) to build or maintain one. Unnecessary because thanks to technological advancements, they don’t need to. Many of the tools and systems that are needed for certain aspects of KM (e.g. documenting, storing, analyzing, sharing, etc) are available usually for free, and then at an added cost depending on the level of personalization/customization an organization needs and

There are restrictions on how much KM SMEs can get into, and the borders are defined by their needs and capabilities. Even the largest of organizations would not employ every KM strategy or tool available to them. Like any other practice, you make use of what is most relevant to you based on what you need and can afford.

Another thing SMEs may not get into (initially) is complex operations like big data analytics- but then, there’s the cloud

Can’t Have this Conversation without the Cloud

The Cloud is really groovy.

The cloud and how it relates to KM really is a whole body of work on its own. That’s not what we are doing here, but it needs to be mentioned because we really can’t have this KM conversation without the cloud.

Cloud services have made business easier and more effective in a lot of ways, by making the IT infrastructure that no business can ignore in a knowledge/digital economy, more affordable, and to many extents, even free to use. The cloud makes it possible to carry out the what-to-dos by making the how-to-dos possible, even remotely. In fact, without the cloud, there would have been no way for most businesses that carried on during pandemic lockdowns to do so. Beyond what the cloud makes possible within an organization, there is also a world of possibility when you consider the opportunities for collaboration with other people and organizations on the cloud. For one, it allows organizations to acquire the knowledge they don’t have from others who do. It also enables them to participate in networks and communities that can enhance the work they do internally. That’s just the surface. In summary, the cloud is groovy, and it is a must-use for SMEs that are looking to unlock the value of KM.

Foundations for the Future

So what if you’re really small, or you don’t quite have it together yet to do KM?

When it comes to the big and more complex stuff (e.g. using analytics, if that’s on your radar), you can work on a sturdy foundation to come back and build upon when you can afford to. In the example of analytics, if you don’t have the tools or human resources, or your data isn’t even all that big yet, you can still make sure to keep a record of it for use in the future, and also work towards building your team and acquiring assets that will make analytics possible and effective when the conditions are right.

There really isn’t anything such as too small to do KM, to be honest. At the very least, information sharing between people happens in any business. What KM does is make it standard practice and create a culture where team members are intentional about using that knowledge to create better results.

References

  1. https://www.internationalscholarsjournals.com/articles/the-impact-of-knowledge-management-on-sme-growth-and-profitability-a-structural-equation-modelling-study.pdf
  2. https://www.researchgate.net/publication/220363579_Knowledge_management_at_SMEs
  3. https://www.tandfonline.com/doi/full/10.1080/23311975.2017.1368434
  4. https://ideas.repec.org/a/wsi/jikmxx/v17y2018i01ns0219649218500077.html
  5. https://media.neliti.com/media/publications/96610-EN-a-knowledge-management-approach-for-smal.pdf
  6. https://www.emerald.com/insight/content/doi/10.1108/JKM-06-2021-0421/full/html?skipTracking=true
  7. https://newsroom.mastercard.com/mea/files/2021/12/Mastercard-MEA-SME-Confidence-Index-2021-WEB1.pdf
  8. https://www.emerald.com/insight/content/doi/10.1108/JKM-06-2021-0421/full/html?skipTracking=true

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