Knowledge management tools must incorporate four components in order to be effective:
Tools incorporating the above components, which are effectively managed and utilised, for the purpose of knowledge sharing, assist the organisation in terms of greater innovative output, either in terms of new products or services or better operational performance. This often results in enhanced financial performance.
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3M have effectively used knowledge management tools to assist with transferring employee knowledge and experience with other employees. These tools assist in motivating the employees to share information, an essential ingredient for innovation to flourish.
The most effective tools enable individuals to operate within communities. Sharing / transferring knowledge within communities enables a strategic focus for development of knowledge and ideas in pursuit of common goals.
Communities promote intrinsic motivation (intrinsic means innate or within; intrinsic motivation is therefore ones internal motivation to keep going; it is the form of motivation that drives us to help others), which is a necessity for creativity and innovation to flourish.
Generally tools should simulate environments that were previously conducive to innovation. Key elements to simulate include accessibility to experts in individual fields, cross department / division networking and providing the means to enable the sharing of ideas and practices.
It is important to recognise that knowledge production is a social process. Prior to knowledge management tools knowledge sharing was often face-to-face interaction (e.g. at the coffee machine, during cigarette breaks, by the water cooler, working lunches and scheduled meetings). Such tools simulate this form of interaction via specialised communities, news based emails of user problems, community events, discussion forums and chat sessions.
Modern tools must strike a balance between supply-side and demand-side knowledge strategies. Supply side strategies provide the means to distribute existing organizational knowledge whereas demand-side strategies attempt to provide knowledge to satisfy organizational needs for new knowledge. Demand-side strategies tend to be more learning or innovation oriented.