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 Knowledge Management > Value Proposition
KM Value Proposition
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"Knowledge is information that changes something or somebody -- either by becoming grounds for actions, or by making an individual (or an institution) capable of different or more effective action."
Peter Drucker , 1990
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Any enterprise shapes itself uniquely according to its fundamental strategic drivers. The value of Knowledge Management is its positive leverage to improve enterprise productivity and innovation. The value of KM can also be stated in terms of the business problems and threats that it addresses. Each of the following value drivers requires a different emphasis in the type of intellectual capital that is being created or utilized.
The following table is simplified and adapted from Verna Allee's white paper called "Knowledge Value Drivers"
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Value-Driver
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Measure
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Customer Intimacy
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Intimate knowledge of customers for the purpose of providing world class service, or to customize and target marketing of products and services |
Breadth & depth of customer purchases; demographics & customer profile |
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Intellectual Property
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Increasing and managing a portfolio of codified and/or patented knowledge that contributes to the financial value of the enterprise |
Value of patents, trademark, proprietary methods |
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Process & Product Quality
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Experimenting with, researching and sharing best practices to increase quality of products, and serve and enhance performance |
Spread of best practices |
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Innovation
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Expanding knowledge required to rapidly generate, produce and market new and innovative products and services |
Time to market |
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Knowledge-based Products
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Generating additional knowledge value in the value chain to deliver higher value, "intelligent" products, and establish uniqueness |
Number of knowledge-based enhancements |
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Rapid Response
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Increasing agility, adaptability, flexibility and responsiveness in a constantly changing business environment
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Change management;
Speed & efficiency |
Amrit Tiwanta, in his book The Knowledge Management Toolkit (2000) describes the "Drivers, Problems Symptoms and Solutions that Create a Strong Value Proposition of KM" (pp.18-29). In his presentation, the value proposition of KM is organized by the following categories: Knowledge-centric Drivers, Technology Drivers, Organizational Structure Drivers, and Economic Drivers.
The following table is a simplified and adapted summary of Tiwana's model:
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Business Driver
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Problem / Threat
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Knowledge recognition failure
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- Companies don’t know what they already know
- Failure to apply existing knowledge
- Failures are not captured
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Rapid knowledge dissemination and application
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- Employees can’t find critical knowledge in time
- Lessons are learned but not shared
- Expertise is not shared
- Inconsistent performance across locations
- Expertise localization and opacity
- Inability to apply what is known
- Competitors innovate at a faster rate
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Tacit knowledge
walk-out
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- Employee departure causes loss of corp. competencies, key clients, suppliers, best practices, and even revenue.
- Critical tacit knowledge is closely held by a few key individuals
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Knowledge hoarding
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- Individual employees closely guard knowledge and insights due to fear of job security
- Little real collaboration
- Arguments flare over turf, not methods
- Collaborative knowledge sharing needs strong motivators
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Unlearning
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- Old business process assumptions, rules of thumb, heuristics and processes are unreliable and outdated; Knowledge is not revalidated
- Old practices, methods and processes continue to be inappropriately applied
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Technology Drivers
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Technology provides only temporary advantages
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- Technology innovation and adoption fails to sustain competitive advantage
- Technology driven advantages are soon copied
- Technology acts as an entry precursor and core capability leveler, not a sustainable competitive differentiator
- Technology, laws, patents, & market share are all temporary advantages
- Added-value quickly becomes expected-value when adopted by enough competitors
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Compressed product and process life cycles
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- Market information, service, and physical product life cycles have significantly shortened
- Complex and often irreversible design decisions need to be make quickly and accurately
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Organizational Structure Drivers
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Functional convergence
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- To accomplish joint objectives, different divisions must cooperate and communicate
- Diverse expertise must be integrated for innovation
- Brainstorming, strategy planning, competitive response and proactive positioning need collaboration, often across multiple functional areas, depts. & companies
- Team members lack understanding of critical process factors for areas other than their own
- The diversity of expertise needed for a complex project brings with it diverse notions, values and beliefs which create a serious barrier for agreed-upon shared understanding
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Convergence of products and services
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- Products and services are increasingly bundled; there are blurred boundaries between products/services
- Perceived market value of products might vary, depending on how the bundling is done
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Economic drivers
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Increasing returns
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- Physical assets – both production-oriented and technological – lose value as they are used
- Sustainability of knowledge-based competitive advantage comes from knowing more about the same things than your competitors
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Tactical Challenges Within an Enterprise Culture
The most powerful expression of the KM value proposition is as the dimensions of KM are well integrated (strategic, tactical and operational). The following list describes practical tactics that implement the strategic vision enumerated above.
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Create operational links between KM infrastructure, innovation initiatives, business strategy development, and results monitoring
- Provide maps to information organized by discipline (cutting across department boundaries)
- Provide a Content Management System (library, archive, document management, portal access, indexing and search) designed to answer specific operational needs and requests
- Capture project reviews and "after-action" reviews and make them visible
- Use Communities of Practice (CoP) as a source of ideas and support
(Build inter-disciplinary and inter-departmental knowledge sharing; open doors and make connections to help projects proceed with reduced barriers)
- Integrate KM resources into business process and workflow automation so that workers do their work in an resource rich environment
(Knowledge resources are visible and easy to access; dashboards make monitoring and feedback constant; and intranet portals cut across departmental boundaries)
- Showcase success stories and lessons learned to drive innovation and prevent mistakes or "time wasting" re-invention
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Create tactical collaboration mechanisms by which knowledge is created or captured, and shared
- Help people connect into a dynamic social network
(Identify cultural issues that enable or retard knowledge sharing and communicate this awareness)
- Help knowledge flow across boundaries
- Recognize that access to people with knowledge is at least as important as access to information, and make that an important cultural value
- Provide efficient access to information, experts, and communities
(IT infrastructure and database systems enable virtual work events, distributed teams, and access to content by internal, external, and even public stakeholders)
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Empower subject matter experts and enterprise leaders to further KM activities within the organization
- Help lessons learned be identified and communicated so as to avoid repeated mistakes
- Help reuse of designs and knowledge base to increase productivity and quality, and make innovation more efficient
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Engage educational and training functions to support KM strategies
- Knowledge retention and transfer to new employees
- Knowledge retention and transfer aimed at strengthening core competence areas of the enterprise (skill development driven by competency mapping and skill gap analysis)
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Engage human resource functions to support KM strategies
- Establish knowledge sharing expectations in everyday work (reinforced by the hiring and selection, rewards and recognition processes)
- Build rewards and recognition systems for innovation and include knowledge-sharing behaviors in performance appraisal systems
- Build enterprise social capital by establishing teams, where people can share experiences and build trust
- Create measurement & feedback mechanisms
- Measurement and feedback of key performance indicators (KPI) can be used to link KM initiatives to outcomes.
- Typically KM is seen as a strategic enabler, however, KM can provide tactical methods through measurement and feedback when those measures show long-term trends, not just short-term effects, and are selected to monitor intended KM results,
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