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Why bother with Knowledge Management?

11th March 2016 | Nick Milton

Nick Milton discusses why Knowledge Management is an asset that should be implemented.

Why bother with Knowledge Management?

At first sight, Knowledge Management can be a daunting topic. It is very poorly defined, has a history of failed implementations, and can take years before it delivers its true value.  There are many more urgent operational issues which need to be addressed, so why undertake something so fuzzy and so uncertain as Knowledge Management?

There are four main reasons to bother!

Firstly knowledge is the one asset you don’t have to buy.

Knowledge naturally is created within your organisation. Every working day, each individual in your firm gains 8 more hours experience. With each project you potentially learn more about your internal processes, and with each product you learn more about the market, the customer, and the technology behind the things you make.  That knowledge - the know-how that allows you to perform and compete - is crucial to your success. It is a major intangible asset of the organisation. Without it you would be a group of smart people who did not know what to do.

Much of the time, nobody pays any attention to that valuable knowledge. It’s not shared, it’s not sought, it’s not recorded and it’s not discussed. We assume it stays in the heads of the individuals and accumulates over time, but human heads are a very unsafe store for knowledge. People forget details, they create false memories, and they can leave the organisation taking the knowledge with them. If knowledge is a corporate asset, then leaving company knowledge in the heads of individuals is actually Knowledge Mismanagement; akin to leaving company knowledge in the pockets of individuals.

You have the knowledge already, it is an asset that you already own and that is continuously refreshed. You just need to manage it better.

Secondly, the value of that knowledge can be very large.

Imagine a company of 5000 staff, with an average of 8 years experience each. That’s a total of 40,000 years of experience. What would that accumulation of knowledge and experience be worth to you, if it were managed properly?

In a recent survey of nearly 400 knowledge managers around the world, we asked them to estimate the value that Knowledge Management had delivered to their organisation. The average figure for companies with thousands of staff, like our 5000-person company in the previous paragraph, was around $20 million over a period of about 7 years. Larger organisations see correspondingly larger value.  That’s quite a valuable asset to leave unmanaged! 

Studies in the oil sector have shown that effective use of knowledge management can save projects in the order of 12% of cost and 17% of time. Shell quote savings of $200 million per year. Mars talks about a billion dollars of “knowledge-enabled value”.

I often say that is we only realised how much our corporate knowledge was potentially worth, we would manage it far better, and far more systematically. Knowledge management would become a no-brainer.

Management of knowledge is becoming an expectation.

The value of knowledge as a resource is becoming more widely recognised, and the management of that resource is becoming an expectation. The world-wide quality standards ISO9001 now features in its 2015 revision, the need to treat knowledge as a valuable resource and to manage it as such.

 Clause 7.1.6. Knowledge 

Determine the knowledge necessary for the operation of its processes and to achieve conformity of products and services. 

This knowledge shall be maintained and made available to the extent necessary. 

When addressing changing needs and trends, the organization shall consider its current knowledge and determine how to acquire or access any necessary additional knowledge and required updates. 

Determine the knowledge, maintain it, make it available, and acquire new knowledge when appropriate. The standard gives more guidance as well, but that’s a good start towards the effective management of knowledge. The ISO guidance will be further improved when the ISO KM standard is ready within the next couple of years.

We know how to do knowledge management.

I started by saying that knowledge management is very poorly defined, has a history of failed implementations, and can take years before it delivers its true value. All of these are true, but we also have a history of successful implementations which can pave the way to success. Patrick Lambe and I have, in “The Knowledge Manager’s handbook” (to be published next month) distilled the success factors from very mature knowledge management implementations, in organisations from all sectors and sizes, to guide you in delivering the performance currently locked up in that most valuable of all assets, your corporate knowledge and experience.

For information on how to avoid the pitfalls of taking knowledge management on in your company visit Patrick Lambe's blog post here.

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