Knowledge Base

Articles

Knowledge & Know-How Management: the case for a new paradigm

Dr Jack Jacoby
DBA, MBA, BA, CMC, MAIMC, AFAIM
Director - ProManage Partnership Pty Ltd

There are few people in business or organisations that haven't been exposed to the tantalising promises of the glitzy "bells & whistles" knowledge management system or the smooth software sales pitch.

The pitch normally goes something like this:

The rate and scale of change in your industry or market is increasing;
Knowing what's happening in that environment is critical to your ability to adapt to it, and perform despite it.
You must collect all the information that may impact upon you;
You must disseminate all such information to anyone within your organisation that requires it;
People who require information will interrogate the system to extract information (knowledge) that they require.

The solution then touted is a sophisticated, information capture, storage and dissemination tool.

There is no denying the need to capture, maintain, store and disseminate information, and there are many competent vendors and systems that deliver this effectively and efficiently.

However, the problems with the conventional approach to knowledge management are many and tend to compound an organisation's difficulty in navigating through the knowledge management forest of jargon, guru peddlers, swish systems and highly rewarded system salespeople.

The Problem with Mainstream Thinking and Solutions

Some of the problems associated with many of the conventional systems include:

There is an assumption that all knowledge captured has equal value to everyone and is thus treated equally. In reality, different people in different roles need different information at different times in different forms and at differing degrees of accuracy.
There is an assumption that eventually you can capture "all" knowledge relevant to you. This is impossible at worst, and impractical and very expensive at best.
No differentiation is made between knowledge that contributes to organisational outcomes, and that which doesn't. The assumption is that someone may need the information at sometime so best to keep it just in case. The marginal cost/benefit of securing that extra piece of input is unquantified.
Because of the sophistication of the systems and the presumption that they need to be a "catch-all" accessible by all, they are very expensive.
Many systems profess to harness tacit knowledge and thus protect the organisation from the vulnerability to its key people walking out the door. In reality, when one examines the offerings, one realises that the systems merely catalogues either "Communities of Knowledge" that possess the knowledge or individuals who possess the knowledge. One still needs to go to these entities to interrogate them as to what they know or what one needs to find out. Having the catalogue, as useful as it seems, may actually be counter-productive since it entrenches the reliance of the organisation on that individual when the catalogue is individually based. Organisations can lapse into a sense of false security that they can access the knowledge whenever they need it – failing to acknowledge that once the person has left the organisation, the knowledge often "dies".
Conventional systems ignore the fundamental purpose for the acquisition of knowledge: the enhancement of decisions and decision-making. It is as if the mere ownership or access to the knowledge is sufficient to deliver the benefit of having the knowledge – as if by osmosis. There is a profound difference between "knowing" something and "acting on that knowledge".
Where measurement exists in such systems, it is traditionally associated with volume, growth and access of and to the content of the knowledge base – rather than of the robustness of the decisions that the knowledge contributes toward. If the knowledge that exists, irrespective of its level of comprehensiveness, doesn't add the quality of decision-making, then it is of no purpose.

A Different Perspective

If one eliminates the hype and slick sales pitch by vested interests, and examines the area of knowledge management from a business or organisational perspective, the solutions to knowledge management are not nearly as complicated or as expensive as they seem.

In a nutshell:

Effective knowledge management is about identifying and securing the knowledge required to make the decisions needed to deliver the KPOs associated with each role within the organisation. Such knowledge is termed mission-critical knowledge.

In other words, there are a number of steps to effective knowledge and know-how management:

Identify the KPOs related to each role within the organisation.
Identify the decisions that need to be made to deliver those KPOs (as they relate to each different role).
Identify the information (knowledge) required to make a robust decision (based on the 80%/20% rule). The identified knowledge elements are termed the mission-critical knowledge elements related to that role. In other words, the elements identified are required for the person in that role to make a robust decision.
For each identified mission-critical knowledge element needed, identify whether it is available. The ratio of what is needed to what is available is termed the "Decision Robustness Ratio" (DRR). The logic behind this measure is that, the more mission-critical knowledge you have about a decision you are about to make, the better the decision. If for example you have identified 10 knowledge "inputs" that are critical to a particular decision, but you only have 3 of them, then the decision-risk is higher and strength of decision is lower than had you had 8 of the 10 required inputs. In this example the DRR for that role would be 30% if only three inputs were available or 80% if 8 were available.
Assess the quality of the knowledge in terms of timeliness, accuracy and fit for purpose. If the quality of the knowledge rates poorly across these three criteria, then it is as if the knowledge isn't available.
Identify the specific systems, processes, procedures or practices that are mission-critical for any given area of responsibility.
Determine the extent that these systems, processes, procedures or practices have been documented. The proportion of mission-critical processes documented is termed the Process Capture Ratio (PCR). If you have identified 50 processes or procedures that are mission-critical to an area of responsibility or accountability, and documentation exists for 20 of them, then the PCR would be 40%. This means that 60% of the mission-critical ways of doing the role "remain informal or still in peoples' heads". A high PCR suggests a strong business continuation profile; strong ability to replicate good work and to protect the business. A low PCR suggests higher risk and vulnerability for the business.
Determine the extent that staff has been trained to use these mission-critical systems, processes, procedures or practices. The proportion of mission-critical processes in which staff have been trained is termed the Process Training Ratio (PTR). There is not much value in documenting the mission-critical processes if staff aren't trained in their use. Ideally, a functional area has a high PCR and an equally high PTR. A low PTR indicates high vulnerability from staff turn over and a higher acclimatisation requirement to the business area.

Benefits of the New Paradigm

The advantages of adopting this way of thinking about knowledge and know-how are:

Augments decision-making
Identifies what knowledge and which processes are mission-critical
Identifies knowledge gaps that if filled, would enhance the quality of decision-making.
Identifies which tacit knowledge is mission-critical
Identifies which tacit processes and practices are mission-critical
Identifies the people and roles that represent the organisation's vulnerability to staff departures.
Enables the organisation to allocate resources to collect, manage and disseminate only mission-critical knowledge – eliminates non-value adding practices.
Enables knowledge to be "delivered" to the decision-maker as and when required rather than forcing them to chase information, thereby making faster decisions.
Able to diagnose the organisation to identify poor decision-making practices – thereby helping to manage decision risk.
Ability to monitor the volume and quality of mission-critical knowledge available to each role.
Ability to better utilise the resources used to manage data and information.
Improves operational effectiveness and efficiency by eliminating knowledge-related non-value activity and resources.
Ensures that all critical systems, processes, procedures or practices are identified and ultimately documented.
Ensures that all staff are trained in all mission-critical systems, processes, procedures or practices.
Enables the organisation to develop their own knowledge, decision and know-how maps without the need for expensive consultants or systems. It is only when the exact nature, configuration and profile of an organisation's mission-critical knowledge become evident through their knowledge maps, can an organisation determine the optimal system to capture, manage and disseminate the information.

Value Adding and Non-Value Adding Knowledge

An organisation's knowledge is what its people and systems know and know-about and what the organisation has "captured" in any form. The purpose of knowledge is to make decisions to act, in order to generate desired outcomes.

Some knowledge is value adding while some is not. As an example, the score in a local soccer match in Greenland in 1923 is information, however, in a business context; it adds no value to the business in determining or improving operations or outcomes (unless it is related in some way to soccer in Greenland).

Conversely, that research has shown that consumer tastes are moving away from your products to the competitors' products is an important knowledge-input because it has significant impact on your business at a number of levels. Such knowledge is value adding.

All organisations gather both value adding and non-value adding information. Problems occur when the ratio of valuable knowledge to non-valuable knowledge significantly impacts the quality of decision-making (too little mission-critical knowledge, or so much data that it is hard to identify the "important" information), and/or when the cost of managing (collecting, maintaining, disseminating) non-valuable knowledge becomes significant in terms of cost and effort.

From almost every perspective, the organisation will benefit if it can increase the amount of value-adding knowledge available to make decisions, and decrease the amount of non-value adding knowledge that exist within the organisation.

Mission Critical Knowledge

Knowledge that helps make decisions that help the organisation deliver its KPOs is termed "Mission-Critical Knowledge" and is more important to the organisation than knowledge that is not Mission-Critical, even if it may be useful at some non-specific time.

Tacit & Explicit Knowledge

Sometimes knowledge is readily available and sometimes it's not. Sometimes it's written down (explicit), and sometimes it's only in peoples' heads (tacit).

Not all knowledge is obvious (explicit). Explicit knowledge is the understanding that the business has from reports, documents, transactions, research, white papers, analyses, and so on. Explicit knowledge is generally the information that you can call on relatively easily.

Much of the knowledge that exists in the business exists in the "heads" of its people and is reflected in their experience, intuition or life learning in the industry or in that functional area. This sort of knowledge is termed "tacit" knowledge.

Although tacit knowledge is vitally important to the business, it creates some difficulties for the business since it is imprecise, hard to identify, unstable and fluctuates with circumstance. Some people for example, have a "wealth of knowledge" about the business, but find it hard to convey or impart that knowledge to others, or are reluctant to do so. Such knowledge is somewhat difficult for the business to manage.

If you or your staff rely largely or wholly on "your experience" (tacit knowledge) to make decisions rather than on largely explicit knowledge, then the loss of the person in the process becomes a major issue and immediately weakens the quality of subsequent decisions.

The business therefore has a vested interest in capturing and recording all such mission-critical tacit decision-making and "converting" it to explicitly based decisions – within agreed cost constraints.

Some organisations attempt to change from a territorial, competitive culture where knowledge is power and is therefore hoarded, to a learning environment where knowledge is freely shared and leveraged. The conversion of tacit to explicit in a territorial culture will often be exceptionally difficult because the "capture" of a person's tacit knowledge may diminish a person's role legitimacy. The request to "download" such tacit knowledge may heighten insecurities and sensitivities within staff ranks and thwart any initiative to capture, share or leverage knowledge.

Merely trumpeting the vision or the corporate objective to become a learning, caring and sharing culture is not enough to make it happen. The individual needs motivation and penalty for not playing ball – the model provides an easily complied with measurement process that disadvantages the individual who hoard knowledge and who don't identify what needs to be known to make quality decisions. Conversely, people who are seen to make effective decisions are people who are valued by the organisation. To be valued, you need to identify mission-critical knowledge.

Know-How

Know-how (the "doing" part of "knowledge") is the ability of doing something smoothly, effectively, and efficiently, and being able to repeat it often with the same result. It's about being expert in what you do.

An organisation's know-how is evident in a number of areas, such as its systems, processes, procedures, practices, guidelines, templates, examples, best-practice database, models, training programs, designs, plans, strategies, research, etc.

Know-how is the observable result of applying what you know to what you are trying to achieve - the organisational KPOs.

Know-how comes as a result of making a decision to act in a certain manner. The manner in which you act is considered the optimal way of achieving what you are trying to achieve in your context.

Knowledge without know-how is like understanding what is needed but not doing anything about it.

Know-how without knowledge is like doing something but not really knowing why or whether it's the best way to achieve the desired outcome.

Knowledge and Know-How

Knowledge represents the collective understanding held by the business and its people. Although it is critical, by itself it isn't much value unless it is applied or acted upon.

Know-how is the evidence of what we know as an organisation, and how we choose to act. Because we know certain things about certain things in certain situations, we act in a particular manner: that is our know-how in that context – or our corporate "wisdom". Change the elements of that action frame and you may get a different decision, action or outcome.

Therefore the relationship between what you know and how you apply what you know is crucial.

Although you may apply your knowledge very efficiently (i.e. develop exceptional know-how), if that know-how is based on poor knowledge, then the know-how is unlikely to give you what you're looking for by taking that action.

Similarly, if the amount of knowledge that you have available about the decision you wish to make (i.e. the robustness of your decision) is low, then the quality of decision, and therefore the manner in which it is applied is likely to be poor, i.e. the ability to continually make good decisions is at risk.

In order for the relationship between Knowledge and Know-How to be optimised, knowledge needs to be relevant to the decision being considered, timely (available when you need it), accurate and easy to interpret.

Internal and External Knowledge

Mission-critical knowledge might be derived from either internal or external sources. We cannot ignore the required knowledge just because it comes from outside the business and over which we may have no control. If the knowledge is mission-critical, then we must make it available somehow to augment those decisions that rely on it.

Much of the knowledge needed to make decisions comes from resources or activities undertaken by the business and therefore available from within it (eg. transaction records, customer details). Systems, processes, reports, and other data management tools already exist in the business. However, many decisions rely on knowledge that exists outside of the business. Typical external knowledge might be CPI, consumer sentiment surveys, industry turnover numbers, GDP, or oil import statistics.

Knowledge and Decisions

People make decisions based on a number of "inputs" that include:

Formal knowledge (explicit information and the understanding gained from that information);
Informal knowledge (tacit information and the understanding gained from that information);
Their experience;
Other peoples' experience.

If our decision has very little formal "knowledge" input and we rely on experience only, then we give little consideration to the changes that may have occurred since the last time we (or others) made that decision. Knowledge about what has changed (or hasn't changed) provides valuable guidance in making the decision and significantly decreases the decision risk. Conversely, a decision made with volumes of low-value information is equally problematic.

To improve the quality of decision making, the decision makers need to secure mission-critical knowledge as and when required to make an accurate decision in a timely manner.

Decisions are also often subjective in that they relate to the way a person feels and thinks about issues and situations rather than based solely on "fact". The subjective nature of a person is formed by their attitudes, perceptions, personal motivations, fears and intuition (as distinct from experience).

People do not make decisions entirely devoid of subjectivity, yet such subjectivity can frequently change the course of events.

To minimise the negative impact of the natural subjectivity that occurs in decision-making, people need to increase their reliance on, and demand for mission-critical knowledge.

Decisions and Actions

Decisions are designed to create an outcome through action. Therefore a poor decision will generate inappropriate action and result in an inappropriate or sub-optimal outcome.

Decisions based on comprehensive knowledge, (all other things being equal), will have a higher probability of delivering desired outcomes.

Organisations should therefore be determined to strengthen the quality of decision-making in order to make actions more predictable in the achievement of desired outcomes. In other words, to obtain greater leverage from its Intellectual Capital to better enhance organisational outcomes.

* * *

The approach to knowledge and know-how management outlined above is intended to enable an organisation to cut through the hype and the forest of self-interest. It enables the organisation to effectively, inexpensively and accurately determine what it needs to know in order to make more effective organisational and operational decisions.

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