Imagine being given ?50,000 (Bt2,627,366). Would you invest the money in a Mercedes, a computer or in knowledge management, consulting company Areopa president Ludo Pyis recently asked state officials attending a seminar on knowledge management.

If your answer is a Mercedes, in the next three years, its value could be halved. If you choose the computer, the value might be nothing. Still, it seems not many people will choose to invest the sum in knowledge management, even though its value will only increase over time.

"This tells us a bit about the problems we face," Pyis said, citing the difficulty human-resource personnel face in convincing organisations to implement a knowledge-management programme.

But knowledge management (KM), Pyis said, has been with humanity since ancient times, as people have been transferring their knowledge to successive generations for survival. In this knowledge-based era, KM is especially important for every organisation that would not like to face a problem when somebody retires or leaves. The organisation will not have to start learning all over again. But first, one needs to identify the areas of knowledge they really need. Organisational knowledge can include:

• Knowledge from outside the organisation: about accounting, about art, about leadership, about skills
• Knowledge acquired from schools and universities
• Knowledge acquired at seminars and workshops
• Knowledge from inside the organisation, which already exists and is used daily

After identifying the knowledge, the next step is to capture it.

"We figure, 95 per cent of people never bring anything home after a training," Pyis said, teasing the participants at the seminar. "Sometimes, we say knowledge is something in the heads of people. We can't ask, can I have 10cc of knowledge ... cut away part of your brain [to acquire knowledge]."

But KM is not just about capturing and passing on the knowledge one has, but rather is about "aligning" it with the actual business use.

Pyis cited his experiences from the time he worked at Hewlett-Packard. There was a tremendous amount of information and reports flowing in and out among local, regional and primary offices. This resulted in 128 people working full-time, busy classifying this information. "But who's using this information? Nobody. It so happened everyone toward the top-management levels didn't even know [the reports] existed," he said.

So, someone in the organisation, perhaps the HR department, must make sure the knowledge collected is aligned with the business needs, the Areopa president said.

Then there is a need to store and organise the knowledge and make it reusable. To make it reusable, it does not require just training, as training and development usually involves only about 5 per cent of organisational knowledge. "Ninety-five per cent of knowledge goes in our organisation in different ways", he said.

Organisations should be able to identify knowledge-driven processes - for example, processes that include a lot of creativity, unlike an accounting process which should always give out the same results - knowledge "carriers" within the organisation, and identify tacit and explicit knowledge.

Explicit knowledge is everything that is captured or put down on paper by means of instructional databases and resides in computer systems, manuals, memos and the like. In general, we call it "business intelligence". Fifteen per cent of all the knowledge used in an organisation is explicit knowledge.

Tacit knowledge, meanwhile, is all the knowledge that resides in the heads of the employees, suppliers and customers, and which was not written down or stored in any way, Pyis said.

"HR departments should realise that if an employee leaves the organisation [because of retirement, disability or to join another organisation], the tacit knowledge leaves the organisation, which is 85 per cent of the knowledge," he said.

After storing it and making it reusable, knowledge should be quantified and managed properly.

At a glance

• Explicit knowledge is everything that is put down on paper or stored. Fifteen per cent of all organisational knowledge is explicit knowledge.
• Tacit knowledge resides in the heads of employees, suppliers and customers, and is not stored anywhere.

This article was first published in The Nation (ANN) on June 23, 2008.