Turning best practice into normal practice

Leading the Way is a column written by PricewaterhouseCoopers professional staff. It appears in the Business section of the Bangkok Post twice each month. The column provides specialised advice to corporate decision-makers in Thailand on global and local business trends.

This article appeared in the August 5, 2008 issue of the Bangkok Post.

By Kulvech Janvatanavit

Growth, cost cutting and talent management are at the top of the agenda for most business leaders. Knowledge management (KM) can help leaders cope with these priorities, while at the same time turn best practice into normal practice.

What is KM?

Before assessing how advanced your company's KM is, you need to understand precisely what it is (see chart). Essentially, KM is the art of transforming information and intellectual assets into sustainable value for an organisation and its people. One of the challenges for management is to build a common understanding within the organisation of what KM is all about.

There are four fundamental elements to KM: content, process, people and technology. While KM is mainly an intangible function, one can see the benefit that can be generated when you compare these four elements to something more tangible, say a restaurant kitchen. In a kitchen, raw materials, the cooking process, capable cooks, and well-equipped facilities are the required success factors. Likewise, the success of "managing knowledge" is the ability of your organisation to build, collect, share and capitalise on your relevant intellectual assets through the four fundamental elements, in order to differentiate your brand.



How urgent is KM?

Business expansion, cost cutting and retaining talent seem to be the most pressing issues in many organisations. Does this mean that KM should be pushed back on the priority to-do list? Definitely not.

When an organisation loses a key expert, or when people are rotated or seconded to different departments, this results in certain disruptions to the business. In the chaos, people always ask, "How are we going to cope?" While many organisations live with the pain until they find replacements, other companies are starting to pre-empt the loss by containing knowledge and expertise at an organisational level, rather than just at an individual level. This is essentially the role of KM.

Take the following example: a business development team needs to help management form a strategic view of the commercial viability of a new venture, the associated risks, the competition, the SWOT analyses, and the required financial resources to be committed. The completeness and the accuracy of the industry and regulatory information to validate the business case are as crucial as the speed to obtain this vital insight. Despite the fact that the team has acquired the knowledge by going through this process time and time again, have such intellectual "assets" been built up, captured, shared and capitalised? Has the value of the business been enhanced - through the team's ability to build, collect, share and capitalise on intellectual assets by accessing the right data and people at the right time? These are some of the questions you need to ask.

To assess how advanced your KM is now, start with the following:

• Understand your business drivers and processes, and identify those that are at the heart of its success. Take banking for example. One must understand the process of acquiring a customer, funding requirements, profile and related financial risks. To be successful, you must be able to offer the right product at a risk-adjusted, yet competitive, price in a speedy manner. Thus, customer satisfaction, financial risk implications, and loan approval turnaround time are all at the heart of success.
• Assess where your knowledge management is today. How mature is it in terms of four KM elements:
  - Content: What are the propositions? What is the expertise/core knowledge that you have? What is the strategy to capture, use and leverage this knowledge?
  - Process: What is the core business process? How is knowledge utilised within this operational component? What improvements could be made?
  - People: What are the expected behaviours? Is the organisation shaped for knowledge sharing? Who are the experts possessing this knowledge?
  - Technology: What collaborative technology is being used now, and what will be used in the future? What could improve an individual's capability to share and access this knowledge?
• Link KM to your business's KPIs on three levels - organisation, group and individual. On the organisation level, you may want to think of the overall cycle time of business processes, reduction in cost of operations, and collaboration with customers and partners. On the group level, you may want to explore collaboration among project members, cost savings due to group activity, time savings resulting from KM, and your ability to leverage your customers' knowledge. On the individual level, you may consider skills, knowledge and experiences gained, time to access information, time to complete tasks, and collection and sharing of knowledge among the business partners.
• Analyse what you want to become, and what it will take to get you there. Through the previous drivers, business process analysis and prioritisation, and through the assessment process, you may be able to form a view of what areas can be improved. Consider drilling down into each key process, and form the view of how knowledge (in terms of people, content, process and technology) should play an enhanced role in your business operations.