How Knowledge Management is crucial for Digital Transformation 

I had a chat with a Chief information Officer of a business conglomerate the other day. His company embarked on a Digital Transformation strategy recently. Millions of dollars were invested in cloud computing and data analytics but he lamented that the efficient return on these investments are difficult to realize. As we spoke it became clear to me that this was a common problem most companies embarking on a digital transformation experience. I enquired on the basis for selecting the digital technology in question and his response was that it appeared to be the best available. Evidently, it appears that the allure to invest is there but grounds for doing so efficiently remain unclear. Let me share my thoughts on how better knowledge management helps identify what needs to be digitized and how to select the digital technology that gives the best returns for investing in digital transformation.

Digitization is the process of digitizing information from an analog format to a digital format. It involves creating a digital version, which consists of bits and bytes, of a physical object or process. For example, developing an application that enables all information normally captured on a physical form to instead be captured on a smartphone or laptop.

What data and information needs to be digitized is an important decision to make. If the decision is made without prior understanding of what information is crucial, the level of data integrity and where this knowledge currently resides, the information that is digitized itself may be incomplete, irrelevant or incorrect. Only when digitization has occurred correctly can the process of digitalization yield positive results.

Digital technologies, such as cloud computing or data analytics, analyze and convert digitized data available and use them to further refine business activities or processes. They enable digital transformation. The usage of cloud computing that houses vast reservoirs of knowledge to seek solutions instantaneously is an example of digitalization. The integration of digital technology into all areas of a business is a very expensive proposition. What is needed is an organically driven integration, starting with an activity or process that provides maximum potential for generating positive returns. This integration is continued gradually until the digital transformation is complete.

Digital Transformation Digital transformation refers to being able to rethink old ways of doing things, to experiment more and to become more agile in terms of responding to digital customers and rivals. It entails a cultural change whereby organizations continually challenge the status quo, experiment and get comfortable with failure.

Digital transformation closes the gap between what digital customers already expect and what existing businesses can actually deliver. Investing in digital technologies through digitalization is aimed primarily to close this gap. However, unless organizations seek to continually learn to refine and reframe their business processes as and when the gap emerges, the digital transformation process will not yield desired results.

Based on the above, there are three primary requirements for successful digital transformation. The first is that the information to be digitized is complete, relevant and correct. The second is that the business process selected for digitalization has the potential for maximizing returns on investment. The third is that learning and relearning of customer needs and practices is institutionalized throughout the organization. These three requirements rest on an organizations ability to learn, unlearn and relearn through effective knowledge management.

Knowledge Management Knowledge Management refers to the art and science of optimizing knowledge flows within an organization. It involves the efficient handling of information and resources within an organization, which is an integral part of digital transformation. Managing knowledge provides clarity on the best means of acquiring knowledge, the mechanisms for producing new knowledge and how the learning process undertaken is integrated in practice. This is especially useful in an era where dealing with customers who are more digitally conscious than ever and are comfortable using multiple devices to interact with a business

Knowledge Management is done through various methods and techniques such as knowledge mapping, the conduct of knowledge café that facilitates unfretted and open conversations, and the creation of communities of practice that encourage interactions necessary to explore options available to meet customer requirements that emerge.

It is crucial to understand that digitization and digitalization enable digital transformation. Whilst these processes incur high cost, they may not be sufficient for digital transformation to occur successfully. What is pertinent is to first acquire knowledge on what information needs to be digitized and what processes need to be digitalized and when. This knowledge is acquired from experience available by experts or through knowledge sharing techniques with relevant parties concerned.

Digitalization involves investment in digital technologies. Before embarking on digitalization, an organization needs first to assess from many different perspectives what processes are currently hampering growth and have to be digitalized first. Getting people who need this knowledge with people who have this knowledge is important in this context. Only then can the correct process be selected for digitalization.

 Digital transformation is an ongoing process. It involves creating and maintaining an environment in which people are comfortable in engaging, interacting and integrating ideas that are free flowing. Such ideas have to then be assessed for its usability and how they may be integrated into existing work routines. This process of learning, unlearning and relearning, is a necessary component of digital transformation. As organizations increase their knowledge management maturity levels, they are able to develop knowledge management strategies that support digital transformation processes for desired results to be achieved.

In summary, the digital transformation process is an ongoing voyage of discovery of new ways to meet the ever-evolving demands of digital customers. This process is facilitated to a large extent by knowledge management. Managing knowledge assists in identifying what to digitize, and how to digitalize optimally. This reduces the costs associated with digital transformation. More pertinently, through ongoing and relentless focus on building knowledge management maturity, the ongoing process of closing the gap between the needs of digital customers and what is delivered will become easier with time.

Dr Rumesh Kumar

Sharma Management International

January 2019