Wednesday 3 June 2020

Why "Finding Better Knowledge" is 100 x more valuable than "Finding Knowledge Better"

2 years ago I posted an article where I suggested that a KM strategy based on "finding better knowledge" was more valuable than a strategy based on "better ability to find knowledge". Now we have a figure for how much more valuable. 

In the 2018 post I suggested that there are two basic ways in which Knowledge Management can add value to an organisation:
  1. Finding Knowledge Better;
  2. Finding Better Knowledge.
The first approach focuses on better search, better content management, tagging, taxonomy, portal structure, and so on. The intent is to have "documented knowledge at your fingertips", and the result is faster and better access to documents and documented knowledge.  The value of this approach is that it saves people time in searching for relevant material, and so drives operational efficiency.

The second approach focuses on learning from experience, on capturing lessons, on connecting people into networks and communities of practice, on collaboration, and on synthesising knowledge into current "best" practices. The intent is to create learning loops and channels in the organisation, for improvement of practice, so that knowledge is continually improved. The value of the second approach is in delivering better decisions, and delivering better results, not just faster decisions. The value comes through improved operational effectiveness.

Often the choice between these two is a clear choice, and the two options are mutually exclusive. To get good knowledge requires time and conversation; good knowledge is rarely fast, and fast knowledge is rarely good.

In my 2018 article I suggested that the value of the second approach, is at least an order of magnitude greater than the first; maybe 2 orders of magnitude. I did not have the statistics to test this estimate at the time.

Now I do.

In the three Knoco KM surveys in 2014, 2017 and 2020 we asked people to tell us (among other things) their business drivers for KM, in order of priority. Business drivers included operational efficiency and operational effectiveness, as discussed above. We also asked them, where they could, to tell us how much value in $USD their KM program has delivered. So we now have the data to test the value of these two approaches.

The graph below shows the average value for the organisations grouped by their priority business driver.

  • Organisations whose primary driver was to increase organisational efficiency, delivered on average $1 million from KM. For these organisations, the most common KM strategy was to improve access to documents.
  • Organisations whose primary driver was to increase organisational effectiveness, delivered on average $106 million. For these organisations, the primary KM strategy was divided between improved access to documents, connecting people through communities and networks, and better lesson learning.
  • The business driver of "providing a better service to customers and clients" is also a type of operational effectiveness driver.
So we can see that in this dataset, operational effectiveness, which comes from finding better knowledge, is actually 100 times more valuable than operational efficiency, which comes from finding knowledge better/more easily. Thats 2 orders of magnitude better.

Bear this in mind when you set out your KM strategy and business case. If the business case is based on saving people time through better access to knowledge, you may be underselling the value by a factor of 100. 

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