Posts Tagged ‘knowledge management’

The HealthCare Blockbuster Trio: Workflow + EHR + Activity-Based KM

November 19, 2013

The Emergency Room (ER) is a dangerous place to be, and the less time a patient spends in one, the better their chances of an optimal outcome.

This is a simple unpleasant fact, and one reason is a simple truism – people who really need to be in the ER tend to be very ill and if you are one of them, your odds are already sub-optimal.
Other than the rare hypochondriac with Munchausen’s syndrome, most patients in the ER are not in a good way – otherwise they would have fixed it themselves or gone to their general practitioner.
The other reason is both more sinister and complex: ERs tend to get crowded, chaotic, and triaged. The chaos is a result of a combination of crowding, acuity, variation, and stressed processes. Many ER patients really should be treated by a primary care physician, but go to the ER instead because they lack health insurance, don’t know how to gauge their condition, or their primary care provider is not open after hours or on weekends. The ER increasingly supports primary care by performing complex diagnostic workups not provided by primary care facilities, handling primary care overflow, and after hours care. (1)

The fact that ER triage’s patients is a frank (and normal) admission that demand has outstripped supply of services, but ER crowding is mainly a function of idiot politicians and a Gordian knot of infrastructure, policies, processes, technology, and people.

Let’s deal with the simplest but most unappetizing part first

Idiot Politicians

Politicians are those kinds of people who are vaguely of the opinion that laws can reduce the duration of gestation, change the behavior of pathogens, or turn aside hurricanes, typhoons, and tornadoes. I am not sure if this is the result of repeated head injuries on their part, bad genes, or just a lack of scientific training. The problem is that they will enact silly laws to satisfy donors, and these laws will tend to cut funding to primary care, education, nutrition, environment, safety, and a host of other epidemiological causes of injury, disease, and ill health. This not only increases the burden of sickness in the net number of patients, but also means that they will tend to have more serious health incidents, not address illness early on, and present in greater numbers, with more complex conditions, more often than would be the case in the null hypothesis in which there was no stupid politician making these laws.

Simply put, politicians as a class are a health hazard, and sadly, there is no cure for them.

Infrastructure and policies

Somewhat caused by idiot politicians, a sub-optimal infrastructure is often the result of policies that shape themselves to the laws that exist (see above).
Often the policies serve people with money rather than those with need, and as a result the infrastructure caters to heroic and epic conditions rather than those that cause the most harm and suffering to patients. This is somewhat because the people who get sickest and sicker more often tend to live lives that do this to them. They live in places that are more dangerous, have work that is more dangerous, have less education, nutrition, and access to primary care than the wealthier members of society. Low Socio Economic Status (SES) is generally speaking, also a health hazard.

As an example, let’s look at a very fancy cardiac unit, a world famous one.
The first successful human to human heart transplant was carried out by the pioneering surgeon, Dr. Chris Barnard at Groote Schuur hospital, in South Africa.
That’s right, not the US nor the UK or France, but South Africa.
In 2001, there were serious moves by the Western Cape government to close the transplant unit, and in the subsequent public and international uproar, one of those involved in the considerations made a rude, surprising, and very accurate argument. South Africa simply couldn’t afford a fancy 1st world cardiac unit serving mainly privileged white men who tended to have long histories of medical self-neglect as the result of over indulgence, when at the same time, thousands of low SES people were dying of entirely curable and preventable diseases like Tuberculosis. During the various brawls over the unit’s fate, the uncomfortable fact was that although the cardiac unit was a heroic and epic institution, it was far less clear if this was the best use of available resources. For every life saved by heroic attempts in the transplant unit, at least an order of magnitude more died because those funds and expertise were not being applied to the things that were killing far more people in South Africa.

Healthcare is often brutal in this way, and the example perhaps exemplifies how the diseases of influential people are more represented in the policies, and thus the infrastructure of a healthcare system than one might notice at first glance. Policies often translate into more and sicker people coming to the ER, and also less funding to address both the causes of the illness and technology and resources to address them.

Processes, Technologies, People

ER is a compression zone in the flow of patients, since many routes lead into ER, and frequently the wisest course when in doubt over severity and acuity of a condition, is to process them through the ER just in case the quietly seated patient quietly dies because nobody took a really good look with the right level of technology and expertise.

All clinician roles are stressful; let that be said before I draw the ire of opticians, dentists, and dermatologists. ER clinicians however are right up there with the highest stress roles in healthcare. Although it must be admitted that ER clinicians generally get to see better outcomes than some specialties, ER clinicians are usually presented with life in its raw state. Torn flesh, broken bones, and mangled people, some still with the smell of gasoline and tire rubber on their bodies, the smudges of nitrocellulose propellant from gunshot wounds on their skin, and lots of vomit, blood, and tears. ER departments are not restful, tranquil, or serene, and no amount of feng shui, fragrance sticks, or furnishings can change that. ER departments have to sort people rapidly into categories and actions to be taken, often in exact opposite order to instinct. Quiet and blue takes precedence over bleeding and screaming, necks take precedence over hands, clear fluids over blood in the ear.

As a result, ER departments have an urgent need to have supporting technologies such as ED Patient Tracking Systems and  Electronic Health Records (EHR), that can remember and track patients that might easily get lost or forgotten, and whose history will be collected accurately and quickly as they transition from the ambulance to the first-look nurse, then triage team, the nurse, perhaps more than a few doctors, specialty care, radiology, laboratory, and yes, accounts. Have they seen this patient before, are there allergies or prior conditions to consider, are they already taking any medications?
However just having an EHR system does nothing unless there is an underlying workflow, and the EHR integrates perfectly with that workflow.

ER workflow is both physical and virtual, and it comprises rules, procedures, activities, equipment, spaces, places, and people. Although some of the people can switch roles in an instant, they are deployed according to a process, licensure, and how the ER facility is physically structured. The very first person must rapidly assess where the patient most needs to go at that instant in order to get them to the right level of care the fastest, and to maximize the use of the very expensive and scarce resources available. The resuscitation team should receive the person with the cardiac arrest; the trauma team gets the one with the bones coming out of the wound, and so on. No sense in blocking the resuscitation bed with the patient with the broken arm. The workflow has priorities, and activities that have primary and secondary actors, and various technologies including equipment, medical gases and fluids, medications, and consumables such as needles, gloves, and dressings.

In figure 1 the fundamental structures of activities within a workflow are shown for typical industrial or business settings  (2), but these map directly to their medical counterparts. Tools relate to equipment and instruments, materials to medications, fluids, and consumables, while utilities relate to medical gases, suction, irrigation, and electrical power.

fig1

Figure 1. Workflow activity substructures

The implication of workflow is that knowledge is applied to the activities by actors in relation to the tasks they carry out and the requisites they use in doing so. As such to have a functional workflow that is supported by an EHR, the ER also needs to consider who knows what and how they will best come by this knowledge in order to apply it effectively at the point of care. The application of knowledge management principles to ER workflow expands this as illustrated in figure 2.

fig 2Figure 2. Knowledge Sources

All things being equal, the ER staff, deployed in space and sequence in a carefully monitored and calculated fashion will quickly identify urgency and action to stabilize, treat, and often admit patients with the maximum efficiency, because in illness, time counts.
However, even a perfect ER, operating at 100% efficiency, will swiftly overcrowd unless the patients can be routed to the next appropriate level of care as efficiently. Whether the next point of care is the patient’s home, their local hospital, or Intensive Care (ICU), the time it takes to process the necessary documentation and route them is not infinitely small, and results in backlog and patients piling up in holding areas in and around ER, and people die in these interstices of care.

The workflow thus needs to integrate with care beyond the ER, so that patients can be drawn off to the next point of care at least as fast as they are processed by ER, and this is where the integration of EHR across the institution comes into play. The workflows at the perimeter of ER can only effectively integrate with those of other services and points of care if the EHR enables seamless transition.

An example of this is the bed management system for inpatient registration. An ER patient that requires definitive care as an inpatient can only be transported to a ward if there is an open bed suitable for the level of care required. To achieve this, the ER clerk must be able to see with great reliability which wards have a currently open and clean bed that has the right associated services, technologies, and level of care. A patient requiring 24hr surveillance may require a telemetry bed, patients with mental health conditions may require special services, and fall-risk patients, and infectious patients have still other bed and location requirements. To complicate matters, ward configurations change, policies changes, and new medical norms arise, requiring the systems and the people to adapt smoothly to changes.
Reflecting on figure 2 one can usefully ask how the ER clerk would know what the current policies are with regard to the patient needs and available beds. The answer is that it will be a combination of embedding the knowledge in the EHR, recruiting people with the right prior application and hospital knowledge, training  on the EHR and the policies, and job aids that are either embedded in the EHR or available in conjunction with it.

Throughout the process from registration to discharge, the integrity of the patient’s record must track smoothly across transitions and locations of care, including follow-up and outpatient care.

Conclusion

Integration of workflow, EHR, and knowledge management methods can provide significant improvements in patient flow management in a hospital, and this can be seen in what is perhaps the starkest situation- the ER. Workflow ensures that the right things are occurring with the right actors and at the right time, while EHR avoids medical mistakes by tracking the patient and their health throughout the system. Knowledge management asks the important question of how all the actors know how to do what they are expected to do. This applies to all the actors involved, whether they are clinicians, administrative staff, the patients themselves, or those that care for them.

Acknowledgement: For his invaluable input on ED Tracking, ER operations, and crowding, special thanks are due to “Mr. BMS” Hub Freeman, MSA, RN, Nurse Executive – BC, Clinical Director for Systems Efficiency and Flow Improvement, Veterans Health Administration

References

1. Hospital Emergency Department Use, Importance Rises in U.S. Health Care System. Hospital Emergency Department Use, Importance Rises in U.S. Health Care System. RAND May 2013.

2. Loxton, Matthew. Knowledge Auditing: An Activity-Based Method for Organisational Success. s.l. : Ark Group, 2013. ISBN: 1783580755.

~~~

Matthew Loxton is a certified Knowledge Management practitioner, and is a peer reviewer for the Journal of Knowledge Management Research & Practice. Matthew works at WBB as a senior analyst applying KM principles to Health IT implementation. Matthew holds a Master’s degree in Knowledge Management from the University of Canberra, and provides pro-bono consulting in Knowledge Management and IT Governance to various medical institutions.

Advertisements

The Ethics of Knowledge: The Taboo Topic of Our Times

November 11, 2013

This blog post doesn’t set out to provide any great answers, but hopefully lays some of the groundwork for the question of knowledge ethics.

Usually discussions about knowledge management revolve around the perennial topics of technology, teams, and talk. If we aren’t exalting or defiling the latest SharePoint application or collaboration platform, we are arguing about teaming and communities, or expanding on how everything is about stories and story telling. The one topic that never seems to enter the fray is ethics. When is sharing morally right, and when is it better to hoard or hide, than share? What about employees and employers that lie about knowledge?

What of secrecy and privacy?

Let’s roll back time a little – It wasn’t all that long ago that doctors routinely held back information from patients, and especially so from women, and the concept of a “freedom of information” law was not just absent, but was unthinkable to most governments. It wasn’t that healthcare providers were swine back then and dead set to harm their patients, in fact reading the medical texts from then, it was thought to be a kinder and more responsible thing to do than to burden the patient with unwelcome knowledge. Now, of course, we see this as unconscionable paternalism at best, and outright abuse at worst – which of course begs the question of what we might be doing right now that future generations will look at and wonder “just what were they thinking?”.

The one area in which the ethics of knowledge gets some play is in ownership of knowledge, largely because money comes into play, but also because of the concept of secrecy.

First the money

Almost all cultures have some sort of regulation of intellectual property – knowledge that can be said to be somebody’s property, to use, rent, or sell as they see fit. Therefore, patents can be held by someone and denied to others, and the owner has legal recourse if that knowledge is used in any of a number of ways that they don’t want. Intellectual property laws and treatments have expanded over time from simply protecting logos and brands, and patents and copyrights, to making some forms of intellectual property a fungible asset in the eyes of the law. In some cases, one can use a copyright or patent as collateral for a bank loan, and patent auctions, swaps, and collectives are a frequent feature of modern business.

It this sense, there are a few quandaries about who exactly owns rights to knowledge that somebody acquires through the course of their work or as part of their career. Most employers ask that employees sign expansive intellectual property rights over to the employer, and many of these are probably neither legal nor possible to enforce. We might then ask how moral it is to try to turn the employees mind into a lockbox, and to attempt to deny them the basic freedom of thinking up new ideas, to synthesize experiences into knowledge, or seeking to improve their station in life by applying that. Should the employer have first rights to something that developed in the mind of the employee, forever? Seems wrong at so many levels.

That was the easy part.

Development and beneficiation

It is probably safe to bet that everyone comes to work on their first day with some level of knowledge that is needed in the organization’s value chain. Presumably, the payment of wages is recognition to some degree of this knowledge, and that the employer pays for its use in achievement of organizational goals. When firms pay for training or when training is carried out during paid hours, the firm invests in developing knowledge that they expect to be used towards operational goals. Many firms require the worker to remain in employ for some period after training, and this is explicable in terms of the value of the knowledge, or at least the cost of creating it. By that standard, the worker owes it to the employer to apply that knowledge to achieving operational goals set by the employer. It becomes less clear when the employee takes the experience of work itself to increase their knowledge. Does simply being in that environment create a duty on the part of the worker if that exposure leads to them having new knowledge? Employees may carry out studies on their own time, or undertake other forms of discretionary self-development that result in a growth or refinement of their knowledge. Do they owe something to the employer for the exposure to a work environment that develops their knowledge? Does the employer owe the worker something if they put that new knowledge to work in the interests of the organization? Sometimes organizations clearly do reward self-development either in the form of direct pay-rate raises, or indirectly through expanded roles or promotion.

Hoarding and Hiding

In the plainest sense, hoarding can be either ethical or unethical – there may after all be reasonable justifications to keep a private stash of knowledge, whether that is tacit or explicit. For example, if the existing knowledge repositories are unreliable, one may simply set up a personal cache to prevent downstream risks of needing it and not having it at hand. Some forms of hoarding, however, may imply that the knowledge is thereby unavailable to others who might need it as part of their work. In knowledge hiding, knowledge is withheld from access by others; it may also be deliberately kept secret so that others are not even aware of its existence. One might argue that in some firms there are abusive or manipulative environments that might make it ethical for the worker to respond by hiding knowledge, but clearly, there is an intention to do harm at some level. As an aside, knowledge hiding may be a clear indication of a lack of attachment when the worker hides knowledge at work that is of value in the course of business operations.

Plain old lying

In a similar vein, and perhaps more frequently, workers and employers may mislead each other with regard to knowledge they claim to have. An employee may give indications, either overtly or tacitly, that they have knowledge or a level of knowledge that they do not in fact have – perhaps taking payment for a state of knowledge that they do not actually possess, especially when they are offered a job based on knowledge they claim to have. In the case of employers, there may be an impression created that they will provide the worker with access to knowledge or opportunities to develop knowledge that do not exist. Employers may lead the erstwhile worker to believe that they will be exposed to knowledge that will be of value in terms of their professional development. Most commonly though, the employer may mislead the worker as to what knowledge they will be using in the course of the role. Many workers discover to their immense disappointment that the true nature of the role they accepted is unlike what they were led to believe, and that skills and knowledge they anticipated using, lie fallow. In cases where these skills or knowledge are core to the person’s self-identity, the person may experience severe and even debilitating stress.

Some experts estimate that up to 80% of job applicants lie about the knowledge they possess, but this is probably dwarfed by the degree to which employers lie about the opportunities that employees will have to use, develop, and acquire knowledge that will be to their benefit.

Up close and personal

People also hold that some things are private and even secret to an extent, and that escape of that knowledge can be harmful to varying degrees. This may range from practical knowledge of how to do something in the sense of knowledge hoarding or knowledge hiding at work, to the intimate details of beliefs and preferences.

The other side of the coin is those who disclose or steal knowledge that is held to be secret by others. Sometimes this is done with intent for a beneficial outcome to the person whose secret is being revealed – such as that they have quietly performed pro-social work, or that they have valued talents or attributes that they didn’t advertise. Often the disclosure is harmful even when no malevolence was intended, such as inadvertently “outing” somebody who preferred to remain anonymous about their donations to a charity, and finds themselves embarrassed by the disclosure. It can also be intentionally harmful, such as the atrocious phenomenon of “revenge porn”.

People even withhold knowledge from themselves, either choosing to be ignorant or selecting to ignore aspects of themselves or others that they prefer not to believe. People routinely rationalize their behavior to maintain a positive self-image, and may become angry and combative when brought into a situation of cognitive dissonance.

Conclusion

With knowledge becoming ever more salient to business survival, the advent of social media, and the disappearance of employment for life, the ethics of knowledge will become an increasingly pressing area of discussion. There are many features to knowledge ethics, and many stakeholders, and it is high time the knowledge management fraternity and business managers rolled up their collective sleeves, gritted their teeth, and got involved with it.

Activity-Based Auditing and Workflow

October 14, 2013

In 2011, I was building an on-boarding plan for an innovative aftermarket logistics model at multinational electronics firm, and I needed to have a knowledge audit element.
Since auditing of knowledge, while not a fully mature science, is at least a very well trodden area of Knowledge Management (KM), I had no doubt that I would find a suitable auditing model within a few looks at the work of fellow KM practitioners, a glance in my bookshelf, or a few minutes browsing websites.
However, to my surprise, although there were indeed a great many knowledge audit templates, none fitted the level of detail required for a production line environment like the one I was facing.

As a result, I needed to build a knowledge audit model almost from the ground up that would match the workflow nature of the business environment in a highly complex and large electronics repair organization that was geographically spread across the world, and which included an integrated supply chain. The target was a reverse-logistics chain that included the customer, a call center, logistics partners, multiple repair centers, and the original equipment manufacturer.

Once the model was created, the basic methodology was published in the JKMRP as a position paper on critical activity knowledge auditing for other KM practitioners to use[1]. Although the intention was to solve a practical gap in a specific area of reverse-logistics, it was obvious in retrospect that the audit model was well suited to any environment in which there are specific goals served by a documented workflow, from clinical and surgical environment, to manufacturing and repair industries. In response to requests to expand on the paper, the Ark Group (a Wilmington company) published “Knowledge Auditing: an Activity-Based Method for Organisational Success” [2]. (Free intro and sample chapter available for download).

Like many long journeys, this one started with a very innocent-looking question: How does the person carrying out this task know how to do it?
Yet when I asked this in practice for repair activities, it became obvious that there was some uncertainty about something that was critical to success.
Laying out the flow sheets of how the repair process worked, it was clear to everyone what sequential steps were to be carried out, and there was reasonable agreement on whom the actor would be, but less clarity on how they knew how to execute.

You might ask why this is important to anyone, yourself in particular.
There are three market pressures and three areas of neglect that make this important, and if you don’t have a solution, you are going to be buried.

Firstly the market changes:

  1. The “Silver Tsunami
  2. Market Turbulence
  3. Globalization

Now the areas of neglect:

  1. Hiring is a mess: In most firms little better than flipping a coin, in many a horror of wasted talent and superstition that is exceeded only by the secrecy and invisibility of just how bad it is. Hiring is typically done with no regard to knowledge.
  2. Training is ineffective: Usually decoupled from the actual job and doing little more than putting “bums on seats” (however you would like to interpret that).
  3. Job instructions are useless: Mostly people have to interrupt each other or create their own “cheat sheets”, which are often out of date, faulty, or downright irrational.

The most knowledgeable people are going to be leaving, there are too few replacements, and those replacements don’t have nearly the training and knowledge of those leaving. The time taken to on-board or even fire up off shoring is excessively long, and efficiency is way down and matched only by worker disaffection.
The market changes rapidly and big players in the top 500 vanish so fast that one can scarcely keep up, while disruptive technologies and business models spring up as if from nowhere. In addition to new customers, new competition, and rapid changes in technology that demand very agile responses and planning, the share of market capitalization has shifted dramatically over the last fifty years. In figure 3 the asset components of the S&P 500 market value is broken down between tangible (standard) and intangible assets. Clearly what a firm knows has become far more important in most cases than what tangible assets like property, equipment, and even cash balance they have.

Figure 3. S&P Market value by asset type Courtesy Ocean Tomo

In a globalized world, new competition and new customers will spring up wherever the market is, not where traditionally located or preferred, and those firms who are unable to rally flexible knowledge application are at a strategic disadvantage to those who know what they know and know how to scale up or down to match market pressures.

If your business has a workflow, then the audit process is designed to identify, on-board, and support workers faster and better, and to result in improvements in the organizational objectives served by those workflows.
The audit does so by making hiring, training, and job aids closely tied to the actual task execution.

The basic auditing principle is not all that hard when one looks at it coldly. The firm comes about to having an actor with the right knowledge, in the right place, and at the right time by some combination of:

  • They were hired to have that knowledge already;
  • The actor was trained in some way; or
  • A job aid would be provided to them at the time of execution.

Precisely which knowledge and what it pertains to would require a bit more granularity, and that hides in the diagram in figure 1 below.

Figure 1. Workflow Sub-Structures

However, this obviously entails a lot of analysis, so another core component of the audit is to focus only on the knowledge that is individually necessary and also collectively sufficient to achieve the organization’s critical goals. After all, organizations have a lot of knowledge that really isn’t on that critical path between work and their main organizational aims. Figure 2 traces the path from the organizational objectives to the individual tasks that lead to their achievement.

Figure 2. Critical Path

So what should you do?
Here’s my suggested shortlist:

  • Gather a team to perform an audit to identify the critical workflows and to audit the knowledge needs
  • Update hiring practices to match the actual knowledge needs at an activity level, and throw out vague and wishful role-based hiring methods
  • Refactor training to align with work activity knowledge needs
  • Build a knowledge base of job aids suited to the activities in the critical knowledge value chains, and that will deliver job aids in a fashion appropriate to the working conditions
  • Build an audit practice that monitors for deviation and applies Lean principles to fixing wasteful workflow

That’s my story, and I’m sticking to it.

References

1.    Loxton, M.H., A simplified integrated critical activity-based knowledge audit template. Knowl Manage Res Prac, 2013.

2.    Loxton, M.H., Knowledge Auditing: an Activity-Based Method for Organisational Success. 2013, London: Ark Group.

Matthew Loxton is a certified Knowledge Management practitioner, and is a peer reviewer for the Journal of Knowledge Management Research & Practice. Matthew works at WBB as a senior analyst applying KM principles to Health IT implementation. Matthew holds a Master’s degree in Knowledge Management from the University of Canberra, and provides pro-bono consulting in Knowledge Management and IT Governance to various medical institutions.

On the Psychosocial Determinants of CoP Success

August 30, 2012

Over the past few years I have been inching along with a thought – what if we looked at Knowledge Management through the lens of psychology, what would we see and what problems and issues would stand out in relief against the many prickly problems faced by KM practitioners.

One that stands out to me is the question of whether CoP success (and we get to define that however we like) is proportional to variation in how much and how its members share knowledge.
When we look at this from a psychosocial perspective, the question that pops out to me is why do some people share knowledge and others don’t, why do some share more and others less.
Is there perhaps a character trait that predisposes people to sharing knowledge, are their environmental pressures and social norms that cause the behavior to vary, are these relatively stable over time and place or do they vary according to some sort of root cause?

Success Factors

Here is the first pass at a list of facets for what constitutes “success” for a CoP:

  1. Longevity
  2. Membership Factors
    1. Member Count
    2. Member Seniority
    3. Member Diversity
  3. Activity
    1. Level of Interaction
    2. Number of meets
    3. Participation
  4. Productivity
    1. Creation of a Controlled Vocabulary
    2. Innovations
    3. Creation of Operational KPIs
    4. Documentation of Best Practices
    5. Degree of Outreach
    6. Efforts in Training & Induction
    7. Mentorship

Psychosocial Constructs

So far this is what I have noted as potential constructs.
The list needs to be expanded somewhat and then trimmed back to only those things that really contribute towards explaining variation in success.

  1. Emotional Intelligence
  2. Locus of Control
  3. OCEAN
  4. Individualism vs Communitarianism
  5. Emotional Investment
  6. Great Leader / Cult of Personality
  7. Action vs Reflection
  8. Conservatism vs Liberalism
  9. Q
  10. Creativity
  11. Frustration Tolerance

 

 

~~~

Matthew Loxton is a Knowledge Management practitioner, and is a peer reviewer for the Journal of Knowledge Management Research & Practice. Matthew holds a Master’s degree in Knowledge Management from the University of Canberra, and provides pro-bono consulting in Knowledge Management and IT Governance to various medical institutions.

It’s Time for a CKO

June 18, 2012

This blog post is a companion piece to the presentation I gave at the June ICKC Practitioner’s Meeting in which I presented slides and discussed some of the history of the launch of Knowledge Management, and why now is a critical time for firms to have a CKO. The title of the presentation was “Time for a CKO?” and was the second presentation of the meeting after “The New Economics” by Peter Bretscher.

The full slide-deck is also available both as a pdf and as a power-point slide deck at SlideShare

The Big Flop

In the 80’s and 90’s “The Knowledge Age” was the new fancy idea, and was taken up mainly by gurus like Drucker, but also several business academics.
Unfortunately the hype quickly overtook any ability to deliver, and consulting firms and software companies pounded money out of it and it quickly turned into a fad.

The idea was good, but the terrain was unprepared and consulting and software simply wasn’t going to deliver an ROI – Management didn’t know how to “do KM”, nobody was quite sure what the objectives were, and there simply were too few actual KM practitioners to even make a dent in it.

The result was an expensive, highly visible, and embarrassing belly-flop.

Back to Basics

So let’s just revisit two of the big moving parts driving KM and for the moment ignore all the practical reasons for KM like faster on-boarding, reducing waste, increasing quality, etc.

Two major changes have been underway historically – where wealth comes from, and the proportion of corporate value that is due to intangibles.

Firstly, wealth has changed in principle source from real-estate during feudal times, to being able to command labour and capital, to a current situation in which knowledge is the primary source of wealth.

Over the last hundred years, the measurement of corporate wealth has shown an increasing shift from property to ability. At the turn of the last century a firm’s wealth was made up primarily from its ownership of tangible assets – real estate, equipment, stock, and cash, but by the arrival of the early Knowledge Era, this had already been shifting

The current era is marked by a shift in the balance between the contribution to EBITDA and Market Capitalization in favor of Intangible Assets, and this is deemed likely to continue for several decades.

Secondly, the share of Intangible Capital as a share of the market value of firms has changed from a historical norm of <20% in the 1970’s to a current situation in which IC accounts for over 80% of a firm’s value.

illustration of the split between tangible and intangible value in the S&P 500 rising from 20/80 in the late 70’s to 80/20 in 2005

Knowledge was seen by Drucker, Senge, and others as being the only remaining way that firms can stay competitive in the Knowledge Era, and the major source of differentiation amongst competitors. These days every firm has more or less the same access to capital, raw materials, basic labor, and equipment as every other, and competitive advantage is no longer a matter of merely securing access to resources or materials.

The thing that separates Apple or 3M from the lower-order players is not physical assets but knowledge and acumen.

At the same time the people that track market valuation have been noticing an increase in the “Q” value that Tobin derived by comparing the market value of a firm with its physical assets and cash.
What has been increasingly obvious since the mid eighties is that the gap has been rapidly widening and that it seems to be stabilizing at around 80% of a firm’s market cap being attributable to intangible assets.

Source Adams & Oleksak (2010)

As per the International Association of IC Practitioners (IAICP), these include:

  1. Relationship Capital such as customer goodwill, reputation, and referrals
  2. Human Capital such as skills, knowhow, and expertise
  3. Structural Capital such as processes, patents, and trade secrets

They also add a fourth component, “Strategic Capital”, which I take as being the overlap of the first three that are individually necessary and collectively sufficient to achieve organizational strategic objectives.

Where Are We Now?

“Intellectual property has become one of the most important resources in the 21st century. It’s now an accepted fact that, just like financial capital or commodities or labor, IP is more than an economic asset – it also forms the basis of a global market”

Manny Schecter, chief patent counsel at IBM. (Forbes 2012)

Nonaka provides a model that distinguishes between knowledge that people can turn into documents (Explicit) and knowledge that either can’t be expressed or is locked away in their heads and practices and maybe even something they were unaware that they knew (Tacit). His model provides ways to move explicit knowledge into tacit knowledge (like studying and practicing the cello), tacit into tacit (like an apprenticeship), tacit into explicit, and explicit into explicit.

In support of this much has matured since his model was devised:

  • Many colleges and universities now offer master’s and doctoral programs for KM, and several institutes such as the Knowledge Management Institute and KM Pro offer certification courses for practitioners.
  • Several KM journals are published, amongst which the Journal of Knowledge Management Research & Practice has a rated impact factor.
  • KM interlocks with several other fields – at one end with the TQM, Lean/6Sigma movements, Applied Psychology, and Operational Research, and at the other end with Finance & Economics through Intellectual Asset Management and Intangible Asset Management

In addition, many large and innovative firms employ KM – from 3M to Xerox, including Deloitte, Dow Jones , Forrester, Fujitsu, Gartner, Google, HP, IBM, Lexis-Nexis, Pratt & Whitney, PWC, Siemens, World Bank , etc.

The primary areas of activity for KM are in workplace collaboration, management of innovation, the development of occupational communities in which standards of practice are refined, and corporate valuation through increased discovery and accounting of intellectual assets.

So where are we compared to the 80’s and 90’s?

The reasons for the lack of mainstreaming of institutionalized Knowledge Management have all fallen away, but the reluctance is still dwelling because of that memory in the minds of many executives. At the same time we have several emergent and increased pressures for institutionalizing Knowledge Management.

  • Technological changes and adoption rates continue to climb
  • You cannot simply put 80% of an organization’s worth under “goodwill”
  • The trade in IC has increased sharply over the last decade both for defensive and product development uses.

Simply put, IC is becoming fungible.

… and even being considered as collateral for loans by banks.

Return of the CKO

The CKO is not a new role, but one which holds increasing relevance in an age where knowledge and other intangible assets form such a large proportion of value, and in a time when retirement rate reaches 10,000 people per day in the US.

The CKO should be the structural keystone that brings IC and knowledge in particular under a single umbrella of scrutiny, management, and governance.
The days in which a firm’s knowledge could be left to the day to day operational dynamics are long gone, and it amounts to corporate suicide to leave knowledge management to chance.

To be sure, everyone “does” Knowledge Management, just like every firm “does finance”, but leaving it to chance implies that it is not likely to be done well, nor done in a fashion that enhances the likelihood of achieving organizational objectives. In much the same way that a CFO does not personally own all the money in the organization but provides governance, guidance, and a framework under which money and physical assets are managed and accounted for, the CKO should do the same for knowledge and IC.

Knowledge Management straddles all operations of an organization, and at its heart asks a simple duo of questions: how does a person know what they are meant to do, and how do they know how to do it?

In this sense KM overlaps on one side with HR/Recruitment in terms of what skills and experience a person needs to have prior to joining the organization in order to execute the assigned activities in their role.
KM also interfaces with Learning and Development in order to make good on knowledge that must be taught in addition to those “just-in time” job aids that must be presented to a worker at the time of execution in the form of knowledgebase articles.

On the valuation side, KM interfaces with Finance to establish value of knowledge artifacts and the abilities of staff.

KM provides both tactical and strategic support for the organizational mission as far as knowledge is concerned – from operational knowledge-bases, to Communities of Practice, to valuation of Intangible Capital such as trade secrets, methods, procedures, copyright, patents, etc.

In addition KM provides the framework and basis upon which those could be bundled or commoditized to make them available for franchising, leasing/licensing, or sale.

Is it For You?

The CKO role, and in fact organized and institutionalized Knowledge Management, is not for everyone, and the research shows consistently that there are several factors that are indicators that institutionalized KM and a CKO role would deliver a strong ROI.

The higher a firm rates on these items, the more likely there is to be a positive ROI for institutionalized Knowledge Management.
Here we deal with the three broad areas.

  1. The Business Model
  2. The Organizational Culture and Environment
  3. Volatility & Variability in the business terrain

Variability and Volatility deserve special attention since the more fluid and volatile the market, products, and labor pool are, the higher the need to be able to learn quickly and adapt fast and be able to lower the risks of volatility by having on-hand knowledge that represents the best and most current available.

To find out for yourself, try two surveys that I have built

  1. The KM Fit-test Survey
  2. The KMOL-C climate survey

Conclusion

The time to institutionalize Knowledge Management is now – the game has changed and all the old obstacles are either solved or no longer significant hurdles to implementing a formal process to gain control of IC.
There has never been a time in which pure knowledge in the form of know-how and know-who determine the value of a firm, and ongoing survival is going to depend on gaining a high degree of management capability over intangible assets.

~~~

Matthew Loxton is a Knowledge Management professional and holds a Master’s degree in Knowledge Management from the University of Canberra. Mr. Loxton has extensive international experience and is currently available as a Knowledge Management consultant or as a permanent employee at an organization that wishes to put knowledge to work.


%d bloggers like this: