A company’s business and work processes are carried out based on the policies and strategies under the company’s missions and goals. Resources are committed to the projects and existing competencies are leveraged to perform the necessary activities. Without having to consciously knowing it, the company is utilizing its knowledge assets in its daily activities. But knowledge assets will not be efficiently used without proper establishment of a knowledge management system.

A knowledge management system allows the company to strategically leverage its knowledge assets to provide differentiations in its outputs from the business and work processes, and greater impacts which help to sustain or increase their competitive advantages.

There are 4 types of differentiations that can be leveraged from knowledge assets:

  • Functional differential – value derived from human capital (e.g. knowhow and experience of employees)
  • Positional differential – value derived from structure capital (e.g. reputation created by innovative products)
  • Regulatory differential – value derived from intangible assets (e.g. issued patents, licenses)
  • Cultural differential – value derived from relationship capital (e.g. values and beliefs inside the company)


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Next: What are the processes of Knowledge Management (KM)?