Knowledge Management/Risk Management: Risks & Rewards

This is the place to be

"Knowledge management" is a fashionable organisational term at the moment. The potential rewards are enormous: cultural cohesion, harnessing know how, sharing skills and experiences, getting tangible gain from your intellectual capital - this is the place to be.

As a result, providers of a myriad of products and services are rushing to describe their wares as "knowledge management". This variety of claimants includes, but is not restricted to, software producers, change management consultancies, operational process managers, marketing and communications advisors, information technology managers, business strategists and human resources practitioners. Many such claims have validity. While it might be fun to watch internal and external providers competing for the "knowledge high ground", the diversity generates some practical issues and risks for organisations that actually want to get things done, especially in terms of the definition and ownership of initiatives.

Definition

One can sympathise up to a point with organisations struggling to define their knowledge management initiatives. After all, many knowledge management initiatives are born from a desire to "find out what knowledge we have out there" or to "break down traditional barriers (e.g. regional, departmental) which prevent us from sharing our knowledge". A large research and development organisation, which described the establishment of its corporate intranet as a knowledge management initiative, was disappointed when the initiative failed to take off. The problem was not the medium (intranets are often very effective media for knowledge management initiatives) but the message (there was little or no guidance to staff on what to do with the medium).

Contrast with the distribution client which established its knowledge management initiative, also using an intranet, around a handful of well defined areas (skills and experience logging, team performance, other initiatives bulletins/discussion) and provided incentives for timely and accurate update of the information. The distribution company's initiative took off at breakneck speed.

Knowledge management initiatives, like all projects, benefit enormously from having a clearly defined scope and objectives. True, successful initiatives will "morph" and expand through demand, but that expansion should also be clearly defined and should have tangible objectives.

Expectations

Knowledge management initiatives often deliver significant benefits yet fail to meet expectations. Often this is because the initiative was "sold" (internally or externally) as a panacea and couldn't possibly succeed in meeting the expectations the launch generates. There are several risks arising from unrealistic expectations. Perceived failure despite material successes is a substantial risk. Perhaps more severe (e.g. costly and time wasting) is the risk that the initiative becomes over-engineered in a futile attempt to meet unrealistic expectations.

A large international non-governmental organisation asked us to review its knowledge management initiative and explain why it was failing to meet almost everyone's expectations. The programme of work had been "sold" to staff as a toolkit to help them all to manage just about everything. In order to try and meet this unrealistic goal, the initiative team had tried to tag on all manner of functions. It is only a slight exaggeration to suggest that they had written their own mini spreadsheet for costing and their own mini project management tool. Needless to say, these "knowledge management initiative" modules fell short of expectations, were less effective (and much more expensive) than standard software packages and had little (if anything) to do with sharing information and knowledge.

Ownership

Most departments or divisions in a sizeable organisation can stake their claim to knowledge management. "Knowledge management is all about: [information technology], [human resources], [strategy & planning], [operations], [sales & marketing], [communications], [change management] (delete where inapplicable)". When initiatives are well defined and are clearly focussed wholly or primarily in one area, clarity regarding ownership of the initiative is relatively easy to achieve. Where initiatives manifestly cut across existing organisational boundaries (often harder to define but often more effective than departmental initiatives), clarity of ownership can be harder. Many larger organisations, seeing knowledge management as increasingly important and "boundary shifting", have established knowledge directorates specifically to own and drive their knowledge management initiatives. Others govern their knowledge management initiatives through cross-departmental boards and/or expert panels (this form of ownership is especially common in cross-organisational knowledge management initiatives - see case study).

There are no right and wrong answers here. The distribution company referred to above, which focussed its first knowledge management initiative on skills and performance drove the initiative through its human resources function. The rather less focussed R&D organisation at first ran its initiative out of the information technology department. There is an important distinction, however, which frequently gets missed; the distinction between ownership of knowledge management initiatives, ownership of the information within knowledge management initiatives and ownership of the infrastructure (often technological) through which the information is delivered. Each aspect requires clarity of ownership and co-ordinated activity between aspects.

Measuring success

Even when the initiative is well defined, expectations are reasonable and ownership of various aspects of the initiative clearly set out, it is often still fiendishly hard to set tangible success measures. There are two polar views on success measurement where success is largely intangible and hard to measure: "don't bother" or "try harder". At Z/Yen we subscribe (within reason) to the latter view.

As a minimum, it should be possible to set tangible milestones on the initiative itself and measure whether or not the activities of the initiative are being achieved on time and on budget without reducing scope. Further, as a minimum it is usually easy to set some targets and measure information volumes and usage statistics. Such output measures don't necessarily reflect effectiveness, but some measurement is much better than none. Further, in environments where usage is not compulsory or necessary, usage statistics are reflecting a form of market forces which is surely at least an indirect measure of effectiveness. If staff are voluntarily "hitting" the knowledge management system on average eight times a day (as in the case of the distribution company), staff must feel that this is a valuable source for their work. To be sure, usage is only one factor - some elements will be little used but highly effective and valuable each time they are used while other elements will be used often adding little value each time they are used.

Further, it is always possible to measure perceived value and satisfaction amongst the people involved in the knowledge management initiative, both providers (the initiative team) and users. Successful knowledge management initiatives often emerge from iterative processes. Structured feedback should provide tangible measures over time and provide vital input into the process of continuously improving the knowledge management initiative to minimise the risks and maximise the rewards.

Z/Yen's ten top tips to minimise risks and maximise rewards from knowledge management initiatives

Ian Harris is Managing Director of Z/Yen Limited. Z/Yen specialises in risk/reward management, an innovative approach to improving performance through strategy, systems, people and organisation. Z/Yen believes that the intelligent management of risk is the basis of significant reward. Z/Yen clients to date include blue chip companies in banking, insurance, distribution, charities and sales/service companies.

[A version of this article originally appeared as"Knowledge Management/Risk Management - Risks & Rewards", International Consultants’ Guide (September 1998)]