The Role And Importance Of Knowledge Management In Innovation

“If you look at history, innovation doesn’t come just from giving people incentives; it comes from creating environments where their ideas can connect.”Steven Johnson (born 1968), Science author & media theorist

In today’s competitive business environment creativity and knowledge become important factors of production, besides other resources. Success of every organization depends on the availability and proper use of knowledge. There are two types of knowledge i.e. tacit knowledge and explicit knowledge. Organization cannot use tacit knowledge directly because it is difficult to share, capture and disseminate so knowledge management converts tacit knowledge in to explicit knowledge. Knowledge management is about supporting  innovation, the generation  of  new ideas  and  the  exploitation of  the  organization’s  thinking power (Parlby & Taylor, 2000). To achieve better results than competitors knowledge is very important, sharing and managing knowledge is important to achieve competitive advantage for firm. Innovation is regarded as a solution for the problem that most of the companies face in the competitive environment.

 Knowledge management includes activities like knowledge gathering, managing, sharing, learning, reuse and retrieval which play a vital role in bringing innovation. The first major role of knowledge management in innovation in today’s business environment is to create, build and maintain competitive advantage through utilization of knowledge and through collaboration practices. Knowledge management helps in creating tools, platforms and processes for tacit knowledge creation, sharing and leverage in the organization, which plays an important role in the innovation process. The second role of knowledge management in innovation is to reduce complexity and risk in innovation process through identifying what knowledge is available, where it can be accessed, gap in the knowledge base and providing processes to fill the gaps in order to aid innovation.

Another key role of knowledge management in development of innovation capability of enterprise is in collection and sharing of explicit knowledge. Although explicit knowledge does not play a dominant role in innovation process as tacit knowledge does, because it is easier to access. Organization combines explicit knowledge with existing tacit knowledge which will be useful in research and development.  For this process the ability of converting tacit knowledge into its explicit form is required and it is done through knowledge management. Innovation is a process that combines existing knowledge in new ways. Knowledge management can play an important role in facilitating access of explicit knowledge, which will be used for re-combination in new ideas.

Another role of knowledge management in innovation is to collaborating both the internal and external factors /boundaries of organization. Gathering tacit knowledge from collaboration partners (customers, suppliers and employees) could potentially reduce risk and cost in innovation. Collaborative experiences positively affect the capability of firms to recognize and understand mechanisms for knowledge gathering, interpretation and diffusion, which increases efficiency of knowledge transfer and that ultimately foster innovation.

Knowledge management also plays a vital role in assuring that knowledge required in the innovation process is available and accessible.  Through knowledge accessibility and knowledge flow, staffs of organization are able to increase their skills levels which can improve the quality of innovation. Knowledge management creates a culture of knowledge sharing as well as collaboration which will brings behavioral change of employees towards creation, sharing and leverage of knowledge through performance measurement. This will add value in innovation process.

Organizations are required to apply new technologies and to innovate timely in anticipation of changes in the marketplace rather than as a reaction to business decline. Knowing when, how and what to innovate therefore is a key competence for organizations (Amidon, 1997). Innovation process highly depends on knowledge, especially on tacit knowledge. New and valuable knowledge is created  and  converted  into  products,  services  and  processes  ,  by  transforming  general  knowledge  into  specific knowledge. Use of effective application of knowledge can bring faster development of new products and services, identifying market needs, fulfilling customer demand in efficient way, calculation of accurate R&D investment, analyzing competitors. All of these are essential for organizational innovation.  Effective knowledge management is a critical success factor when launching new products

Knowledge management positively influences innovation and competitiveness. Successful knowledge management acts as a coordinating mechanism to enhance both innovation and organizational performance.  Through the proper knowledge distribution and sharing, organizations can bring the innovation. To gain competitive advantage organizations should continuously learn from outside sources.  Properly managed knowledge resource is important to cope up with the challenges of organization in competing environment for better business performance. Knowledge accumulation capabilities are a source to intensify organizational innovation. For improving performance of innovation creating and sharing knowledge is important. Knowledge utilization is the most important part of the knowledge management processes because it helps to improve and achieve higher organizational performance.

There is positive relation between knowledge management and innovation. Organization can be more innovative when it has the ability to create new knowledge. Knowledge management can provide more productive brainstorming and better usage of new ideas, and thereby improve innovativeness of organization. The importance of knowledge management is growing every year. As the marketplace becomes more competitive, one of the best ways to stay ahead is by responding quickly to new information and innovations. Knowledge management emphasizes the importance of innovative organizational culture, where innovation, creativity and learning from mistakes and appreciated. Knowledge management improves growth willingness, which has a positive influence on innovation capability of an enterprise. Beside indentifying and implementing new ideas getting feedback information about product or process is very important for the future innovation process. The key activity of knowledge management is learning through current integration of experience into the existing knowledge base.

The continuously increasing pressure of competition and global markets is forcing organizations to become more innovative, with a view to increasing overall competitiveness. knowledge  activities  like  knowledge  gathering, managing, sharing, learning,  reuse and  retrieval  play  important  role  in  bringing  innovation. Knowledge management plays a significant role in innovation as there is direct relation between them. Knowledge management is a fundamental factor that promotes organizations innovation. This is true because the generation of new ideas is through proper management of knowledge which is a seed of innovations. Knowledge sharing and knowledge creation is very vital to improve innovation performance. Innovation has been taken as a main solution for the difficulties that companies faced in the highly competitive environment. To innovate, companies must identify their main sources of knowledge and be capable of exploiting them.

Reference:

  1. Samina Nawab, Tahira Nazir, Muhammad Mohsin Zahid, and Syed Muhammad Fawad “Knowledge Management, Innovation and Organizational Performance”
  2. Kashif Akram, Suleman Hafeez Siddiqui, Tauqir Ahmad Ghauri and Muhammad Atif Nawaz (2011), “Role of Knowledge Management to Bring Innovation: An Integrated Approach.”
  3. Nietu, M. and Perezcan, O.C. (2004), “The Influence of Knowledge Attributes on Innovation Protection Mechanism”, Knowledge and Process Management, Vol.11 No.2.
  4. Marina du Plessis (2007),” The role of knowledge management in innovation.”

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