Flash Forward

While some companies try to acquire expertise from outside sources, many others make the most of what they already know. The business discipline of knowledge management, defined as the practice of organizing and distributing the collective wisdom of a company's employees, only dates back to about 1995, when the first convention devoted to the subject was organized, according to Carla O'Dell, president of the American Productivity & Quality Center in Houston and co-author of If Only We Knew What We Know (Free Press), a book on managing corporate knowledge.

O'Dell notes that people have been trying to organize knowledge since at least the days of Plato and Aristotle, but only in recent years has knowledge management made much of an impact in business. She traces the boom to an increasing interest in best practices, benchmarking and other attempts to identify and recreate world-class competitive techniques; the development of information technology powerful and flexible enough to do the job efficiently; and the simple fact that the ideas have been out in the workplace long enough to be tested and refined.

"We're at the desirable point--beyond the bleeding edge, but where we've learned enough lessons to benefit from what we know," says O'Dell. What we know now is that knowledge management is essentially a three-step process. First, you ask yourself what knowledge your company possesses that gives you a competitive edge. It may be the ability to make accurate bids, understand customers, design superior products or any other component of competitiveness. Next, you find out where in your organization that information resides and which employees know it best. Finally, you organize and disseminate the crucial knowledge to the other people in your company who need it.

Knowledge management benefits companies of all sizes, but it's particularly well-suited to small businesses because they don't face the same barriers of geography and complexity that larger, more dispersed organizations do, says O'Dell. Small companies that do business with larger companies are soon going to find they must learn to formally manage knowledge, she adds. It will be just as it is with quality, where many large firms demand evidence of quality management processes before considering small suppliers.

This article was originally published in the January 1999 print edition of Entrepreneur with the headline: Flash Forward.