"Peter Brand: Billy, this is Chad Bradford. He's a relief pitcher. He is one of the most undervalued players in baseball. His defect is that he throws funny. Nobody in the big leagues cares about him because he looks funny. This guy could be not just the best pitcher in our bullpen, but one of the most effective relief pitchers in all of baseball."
~From the movie "Moneyball" (2011)
I was reminded of the movie during a recent conversation when someone asked me "Will a CEO be happy implementing a large scale solution to know that "nn" documents were shared in a group"? Measurement myopia leads us quickly to the maxim "What you can measure you can manage". However, as Einstein said" Not everything you count, counts; not everything that counts is counted". In knowledge management especially, establishing a relationship between business growth (and profitability) and organizational knowledge, is at best tenuous. While there are several research papers to establish that knowledge leadership has a definite impact on sustainable competitive advantage, growth, profitability, innovation and several other business performance attributes, it would be foolhardy to attempt to establish a formulaic method to arrive at this conclusion. Study of several organizations that have implemented knowledge management systems, and have progressed along the knowledge maturity path demonstrate empirically, that an organization that is able to leverage its intellectual capital is definitely better off than an organization that is struggling to get its thoughts organized. Enterprises with a higher level of knowledge management maturity have a higher potentiality to strategize and innovate. (Hagel et al, 2002)
That said, meaningful measures of knowledge management definitely have their place under the sun. It allows the organization insight into behavioural, cultural and aspects of organizational dynamics that facilitate or hinder collaboration, sharing of knowledge and therefore the capability to innovate. More importantly, it provides an anchor to correlate organizational performance to knowledge management, thereby enhancing the ability of the organization to improve business performance, by enhancing its capability to organize its knowledge management competencies. What then are some of the measures
(*) that will eventually help link up to business performance?
- Number of sharing relationships resulting from exchange of knowledge (especially when it is across boundaries) – an indicator of innovation
- Re-use rate of frequently accessed content – an indicator for improvement in efficiency and quality
- Competency enhancement – A measurement of conversion of tacit to explicit knowledge evidenced from the conversion of online content into process / knowledge repository
- Lessons learned and Best practices implemented
At higher levels of maturity, organizations even go on to discover the accuracy of knowledge dissemination – the number of times a knowledge nugget reached / or was discovered by the right person at the right time. This along with other metrics like number of new ideas that translated into innovative products, practices or services, and so on provide valuable clues to the organization on the impact of knowledge on the organization's ability to lead them on a path of growth and sustainable competitive advantage.
Personally, I don't believe it is possible, as yet, to establish with any level of accuracy that sharing "nn" documents resulted in a $yy savings to the company. However, I think it will be possible to empirically show that such a relationship does exist. Knowledge Management is no longer that "leap of faith". In fact, with an ageing population, rapid change in technology and various other parameters, it is fast becoming a resource that no organization can do without.
How did your organization take its decision to implement a KM system? Write in with your feedback and comments.
(*) – Adapted from the Knowledge Management Handbook – Edited by Jay Liebowitz.
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