In his book, Post-Capitalist Society, management guru Peter Drucker wrote that knowledge contributes value to a firm in two ways: increase revenue, and reduce costs.
If you think about KM in terms of ultimately affecting one of those two things, it then becomes a matter of identifying what business issue KM is being applied to and understanding in advance what intended benefit KM is expected to bring. You identify your measures and metrics and create a baseline before you roll out your initiative, and then you measure and report and adjust.
Example: The Commodity Trading Desk for a global agricultural products company
A group of commodity traders was set up in trading offices around the world to permit 24/5 trading of ag commodities. As one market closed the trader there would send an email of their open positions, trades, and notes to the rest of the traders. This one message, plus dozens of others through the trading day to report trading activities, meant that on any given day a trader would be deluged with 200-300 emails, which they would spend a couple hours in total reading throughout the day to make sure they didn’t miss an important signal that might affect their trading decisions. When asked what they’d do with an extra hour of time in their day they said, without hesitation, “We’d turn it into money.”
After studying their activities and confirming the above statements, we worked with the department head to reorganize the whole trading department. We re-allocated tasks and activities in a way that would permit automatic filtering of email, thereby reducing by 40% the amount of email hitting the trader inboxes - and the amount of time they spent dealing with it. We also inventoried expertise required for the trading activity and identified three distinct knowledge domain areas that were involved in the trading activities. This formed the basis for the above re-allocation, and allowed us to better leverage the expertise of the traders by better focusing them on a narrower set of tasks.
As a result of our KM work this client realized a significant productivity improvement gain among their global trading group that drove increased trading revenue worth millions of dollars per year. It reduced email volume reduced worries about missing an important message, contributing to increased job satisfaction among the traders. This is an example of a soft benefit, which one would expect to show up in an employee engagement survey.
Tom Short Consulting