The rise of the computer and the increasing importance of intellectual asse
ts have compelled executives to examine the knowledge underlying their busi
nesses and how it is used. Because knowledge management as a conscious prac
tice is so young, however, executives have lacked models to use as guides.
To help fill that gap, the authors recently studied knowledge management pr
actices at management consulting firms, health care providers, and computer
manufacturers. They found two very different knowledge management strategi
es in place.
In companies that sell relatively standardized products that fill common ne
eds, knowledge is carefully codified and stored in databases, where it can
be accessed and used- over and over again- by anyone in the organization. T
he authors call this the codification strategy. In companies that provide h
ighly customized solutions to unique problems, knowledge is shared mainly t
hrough person-to-person contacts; the chief purpose of computers is to help
people communicate. They call this the personalization strategy.
A company's choice of knowledge management strategy is not arbitrary-it mus
t be driven by the company's competitive strategy. Emphasizing the wrong ap
proach or trying to pursue both can quickly undermine a business. The autho
rs warn that knowledge management should not be isolated in a functional de
partment like HR or IT. They emphasize that the benefits are greatest- to b
oth the company and its customers - when a CEO and other general managers a
ctively choose one of the approaches as a primary strategy.