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Making KM Pay Off

Making KM Pay Off

Knowledge management doesn't have to be squishy. Here's how to improve the odds that it'll benefit the business Some companies seem to view knowledge management with the same short-sighted attitude that the government has toward global warming. Lacking hard data that quantifies KM's worth -- or global warming's harmful effects -- executives and policymakers dismiss both as fads and refuse to fund either. We can't help with global warming. But a new study by Teltech Resource Network, a research and knowledge services company based in Minneapolis, may help executives overcome doubts about KM. Teltech set out to determine what, exactly, it takes to build a top-performing KM program. Andy Machuda, Teltech's president, says the company undertook the research in response to KM's growing popularity on the conference circuit. "We feared it was just going to become a buzzword, because there's no denying that it can be a confusing topic," he says.

"Businesspeople started to come to us asking, 'Where's the business impact? I just came back from a KM conference, and we need to know if this is really about business improvement or just another trendy thing.'" The company researched and studied 93 knowledge management applications at 83 different companies and divided those projects into high-, medium- and low-impact projects, based on such factors as whether there was a clear demonstration of realised benefits, comparative usage levels and trends, and levels of advocacy and enthusiasm. In order to qualify for inclusion, the projects had to be linked to a strategically important activity and focused on effecting the reuse of knowledge. More than two-thirds of the high-impact projects were tied to production, product development or customer service (see "Where the High Performers Are").

Overall, the projects represented a number of business objectives: 45 per cent of the applications were intended to generate revenue, 35 per cent to contain costs, 10 per cent to enhance customer service, 6 per cent to improve quality and 4 per cent to refine internal processes. Machuda says it was heartening to discover that KM is not merely a cost reduction tool; in fact, the primary knowledge management objective of the high-impact projects was to leverage best practices (see "What the High Performers Do"). He says the research reminded him of the child's cartoon game "Where's Waldo?" which requires hunting through a bewildering pictorial maze for a bespectacled, striped-shirt wearing character named Waldo. "Everybody's looking for Waldo [in KM]," says Machuda, adding that Teltech's findings reveal best practices that will help companies locate the "hidden" value of their KM projects. If you want to excel at KM, start here.

KM by any other name. Your company may already have some knowledge management projects under way, but they may lack the KM label. "As many as 42 per cent of the high-impact projects we studied didn't use the term knowledge management at their inception," says Machuda. Why? "There was a business issue already on the table that needed to be solved," he explains. "When we actually looked at the project, it became obvious that they'd solved the problem by managing knowledge." For example, he cites projects in the pharmaceutical industry that reduce the time it takes to get FDA approval for a drug. They're all knowledge management projects, he says, but "the underlying business requirement was getting products to market faster." Do your homework first. "We found that [managers of] 76 per cent of high-impact applications had invested in putting together an advance-planning strategy," says Machuda. "Only 13 per cent of [those in charge of] low-impact projects had done so." So it seems that the "let's go out and do it and see what happens" philosophy does not yield groundbreaking knowledge management efforts. Machuda says that the lesson here is to remember that KM is a means to an end, not an end in itself. "It's a process you can apply," he says, but there first has to be a well-defined business goal and a clear strategy.

Organise your content. Teltech discovered two primary methods for organising and transferring content in a knowledge management application. The first is the storehouse model, which creates a big database of information. ("You don't have to talk to anybody except the database," says Machuda.) In contrast, the pointer model is directional in nature; users are directed to an individual who holds the knowledge. This method does not always require technology. In its common practice, "You pick up the phone and call [the expert]. It's networking in its most fundamental form," says Machuda.

Interestingly, companies most effective at organising and transferring knowledge use both methods. "Seventy-one per cent of applications that applied a combination of both storehouse and pointer were high impact," says Machuda.

Purely storehouse projects had a much lower level of success: 32 per cent were high impact. Purely pointer models had a similar success rate. Moreover, 100 per cent of the high-impact applications had content organised so that "next steps" were immediately obvious to users. "Having accessed a high-impact KM base, people knew instantly what next step to take. You knew where to go and why that information was important. You also knew what action to take as a result of this information," says Machuda. Fewer than half of the low-impact applications contained this element.

Invest in content maintenance. In 84 per cent of high-impact applications, managers made an ongoing investment in content creation and maintenance. To do so, they used two types of people: those with the skills to extract, organise and manage the content, and subject-matter experts (usually found within a business unit) who decide what goes into the content. Because the experts are linked to the business process that the KM application is created to serve, Machuda says, the KM process in turn becomes more integrally linked to the business. (Fifty per cent of low-impact applications did not include investments in content maintenance.) KM also means change. Plan for it. Seventy-four per cent of the high-impact projects were supported by explicit change management efforts, such as user training, usage promotion and programs to recognise and reward use of the application. "When they conceived the idea for these applications, executives understood that people played a major role in the success of the project. They engaged people in community building and assumed motivational roles," says Machuda. (On the other hand, a whopping zero per cent of the low-impact applications included any change management measures.) "When you create a knowledge base for a specific community of people, the members of that community must understand what's in it for them," Machuda advises.

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