The Importance of Knowledge Managment to Organisations in 21st Century Essay

The Importance of Knowledge Managment to Organisations in 21st Century - Essay Example Today’s work force is heavily involved in work like sales, education, health care, banks, insurance firms, and law firms. They also provide business services such as coping, computer programming, or making deliveries. These jobs primarily entail working with, distributing, or creating new knowledge and information. In such knowledge and information oriented economies the market value of the firms is based largely on the value of intangible assets for instance proprietary knowledge, information, unique business methods, brands and other intellectual capital. In the current business scenario physical assets like building, machinery, tools and inventory account for just 20 percent of the market value of many public firms (Beijerse, 1999). Knowledge and information in today’s era provide the foundation to companies to come up with or produce new products and services. Such product innovations include the credit card, overnight package delivery, or world-wide reservation sys tems. Even certain products can be classified as knowledge and information intensive products, such products include computer games, requiring a great deal of knowledge to produce. Traditional products also are making use of knowledge for instance in the automobile industry both design phase and production phase rely heavily on knowledge and information technology (Sparrow, 2001). These changes which have been described above along with considerable amount of corporate restructuring have lead to the creation of a digital firm. A digital firm is one in which all of the organisation’s significant business relationships are digitally enables. In this kind of digitally enable business model an organisation is connected to its customers, suppliers and employees by means of digital networks. Core business activities are carried out through these networks spreading across the organisation and linking multiple organisations in a way that these networks create a value web (Valkokari a nd Helander, 2007). These digital firms are quick and nimble in sensing and responding to their environment. This capability is the fundamental difference between a digital firm and a traditional firm. This capability enhances the survival chances of a digital firm in turbulent times. Digital firms can be grown in to global organisations having global management practices in them. By restructuring their work to fit digital means of operating, a digital firm has raised its chances to achieve unprecedented levels of profitability and competitiveness. A digital firm makes use of internet and digital technology to integrate its key business processes with its channel partners. In this way vital information can be shared with important constituents of the business in a seamless way. In order to reap the potential benefits of becoming a digital firm, organisations are investing heavily on information technology, which enable them to integrate internal business processes and build close wo rking ties with channel partners (Wong, 2005). Since knowledge is the key word over here for an organisation therefore it is important to highlight the distinction between data, information, knowledge and wisdom. Data is the flow of event or transactions captured by an organisation’