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February 2005
Inside Knowledge
How to Demonstrate the Value of KM
Published in the Ark Group magazine "Inside Knowledge" February 2005
By Oliver Schwabe and Sergej von Middendorp
The title to this column was inspired by a friend and colleague who is the knowledge manager at a financial institution. He continuously received glowing feedback from all departments and the CEO. However, when he submitted a budget plan for 2005 it was turned down. The decision makers did not believe the activities were adding to the bottom line and this was the main 2005 priority. I think you can imagine the feeling he had walking out of that room…. Does this sound familiar? The million dollar question for the 2005 knowledge manager seems to be: How do I demonstrate to decision makers that knowledge management creates value?
Our ongoing work and research in this area point to some themes that need attention:
- KM is more than “knowledge management” and encompasses all facets of managing the intangible assets in an organization in harmony with all of its other influencers and dynamics.
- KM must be used to create specific and measurable value for the organization.
- KM and related efforts should not be addressed as separate activities in the organization, but should become integrated with daily operations.
The value in any organization is created in the daily interactions of people with customers. In western economies more than 70% of people now work in services. Information and people have become the main ingredients of doing business. Helping organizations support their people do their work better is what KM should be about in 2005.
Critical for achieving this goal are the removal of some historical paradigms:
- Managers must understand that their organizations are embedded and dependent upon a plethora of relationships to stakeholders – it is these relationships that must be mastered.
- All stakeholders must be intensively educated and supported in collaborating through technology within a climate of trust and respect.
- The pressure for real-time innovation must be recognized and resolved pro-actively.
Many KM initiatives have unfortunately failed to clearly communicate and demonstrate value in a language that was understood by management. We need tools and methodologies that help us ‘see’ the additional opportunities that come with the shift to complexity. The network as the pattern of work and organization, the links between intangibles and measurable tangible benefits, the building of strategic capabilities through innovation and the supporting IT systems and infrastructures. While helping us tie these initiatives to daily operations on the one hand they should help us communicate in terms that are understandable for our business stakeholders.
We will challenge your thinking in this area by writing a number of columns discussing these issues in 2005. The Proof of ValueNetwork is a network of expert practitioners focused on helping you integrate your initiatives into business and supporting business communication.
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