Don't be a 'snake oil salesman'
Ash, Chief Executive,
Association of Knowledgework
Promote Knowledge Management in the Pragmatic Terms of Critical Success Factors
- Failure to Translate to Measurable ROI
- Measure KM in Company's Own Metrics
- Intellectual Capital is about Future Earnings Potential
- Business Need is Driver from Canada to India
- CRM Offers Practical KM Solutions
- Think Big, Start Small, Build Incrementally
- But, Don't Tumble Completely into Pragmatic Pit
- Answers to Hard Dollar Questions
- Alternative: A Classic Snake Oil Success Based on KM
If selling the knowledge asset ever made you feel like a snake oil salesman, it may be that the perception is reality. That is, you're presenting it like snake oil.
There never was such a thing as snake oil, but thousands of bottles were sold as cure-alls in America in the late 1800s purely on the strength of a promise, primarily to gullible patrons at carnival sideshows. By 1905, "patent medicines" suffered a serious setback when Collier magazine published an expose.
Promoters of the knowledge asset aren't hucksters, but the value of their product is often met with similar skepticism by a not-so-gullible executive who wants to "see the money."
The problem is, many advocates are so high on the ethereal ecstasy of their own perceived value of knowledge that they fail to translate it into terms management can understand. They also fail to recognize that knowledge is not an end in itself; and, if it is, management is not interested. Knowledge alone is . . . just knowledge.
Mining knowledge is an easier sell, if it is proposed in terms of
measurable ROI. And, unlike knowledge, the results of knowledge use can be
During a recent email conversation about knowledge audits with members of the Association of Knowledgework (AOK), Carl Frappaolo, EVP, the Delphi Group, said "analysis of a knowledge audit cannot proceed with any degree of focus until the critical success factors are defined."
His advice was to ask what matters most to the organization, analyze the potential of KM to address what matters and then fit KM proposals to the existing strategies of the company. Ask questions like:
- What issues need to be addressed to ensure the solvency and competitiveness of the organization?
Then one can use the answers to develop practical proposals that will help meet the organization's measurable, bottom line objectives. The metrics of success for the company will also be the metrics of the value of managing knowledge and therefore the value of knowledge itself. Bob Buckman, president of Buckman Laboratories, has been following that basic principal for years. He measures the success of KM by the number of new products brought to market.
You see, it's no longer the intangible nature of intellectual capital that confounds or frightens executives.
Stephen Denning, consultant to The WorldBank and author of The Springboard, says "knowledge sharing is essential to economic survival in the new economy and knowledge sharing is the sine qua non to survival."
Professor Baruch Lev, professor of accounting at the Stern School of Business of New York University, has reported a dramatic shift in investment patterns in the U.S. from a 70/30 ratio of tangible to intangible assets in 1929 to a dominance of investment in intangible investments today. He also notes that the ratio of market to book value has shifted from one-to-one in the mid-70s to more than six-to-one by the mid-90s. For some companies it's much higher - America Online (AOL) and Microsoft are at around 90 percent of their market capitalization value based on intangibles.
Management knows that.
What management wants to know is how the knowledge use advocate plans to help mine intangible assets to meet the critical success factors of the organization.
That was the key strategy for Leif Edvinsson, Skandia's groundbreaking CKO in Stockholm, Sweden 10 years ago. It has been the key to the more recently acclaimed success of Ash Sooknanan, corporate knowledge manager for the Workplace Safety and Insurance Board (WSIB) in Toronto, Canada. And, it will be the key factor for K.S. Srinivasa Murthy, corporate head of knowledge management for Hindustan Lever Limited, Mumbai, Maharastra, India.
Edvinsson appreciates being called the "grandfather" of intellectual capital (IC), but says "the world's first CKO might (actually) have been an accountant in the 1490's in Italy." While he thinks in the idealistic terms of other knowledge professionals, his action plans are in the no-nonsense language of a bean counter:
"IC is about future earnings potential."
"Accounting is the knowledge nerve system of an enterprise."
While reviewing the draft of this article, Edvinsson added this: "The core of KM and its financial value is to increase the value adding of human potential. This can be measured by VA (value added) per employee or for national level GDP per capita. This number highlights in one figure the value creation by the knowledge worker, or human capital, by using the structural capital, such as knowledge technologies, patents, knowledge recipes. In Skandia, we measured both and improved the score by about 100 percent in three years."
He went on to say the organization per se becomes the springboard for human knowledge potential, the tool for value creation.
"That's why Buckman, like Skandia, is focusing on the innovation score to see if the organization is renewing with the right pace. If not, the value adding per employee will erode, and a liability is emerging for the leadership. This liability is the gap between what is achieved of value adding versus what can be achieved, i.e. the potential earnings capabilities."
His business-oriented approach to IC has earned Edvinsson and Skandia sustained recognition over the past several years including "Most Admired Knowledge Enterprise in the World" in both 1999 and 2001.
Sooknanan recalls: "What drove WSIB was the business need. Too often we forget that this is what knowledge management in business is all about. Knowledge management is about leveraging what we know to address the needs of the business. So when we started with KM we had no 'big money', 'big changes' or 'big ideas' in mind. We wanted to just work smarter, reuse, reduce and recycle what we could."
Today Sooknanan and the WSIB are recognized as practice models in the use of KM by a government agency.
Although Murthy is just a year into his KM job, he has spent 30 years in the Unilever group of companies in India in marketing, general management and commercial roles. He was chosen to head the KM initiative because his experience in the company provided a deep understanding of the business processes, key strategic priorities, the organizational culture and a company-wide network.
Yet, in his first year he is finding it difficult to convince management of enterprise-wide programs.
"One of the reasons for this difficulty seems to be our inability to articulate to the senior management in a persuasive and convincing way, what knowledge management is and why it needs to be a corporate priority. The way KM is described, it is often seen to be fuzzy and amorphous by many senior business managers - it is either seen as IT applications (knowledge portals / content management tools etc.) or HR (organizational culture, performance development plans, rewards and recognition systems to support organizational learning etc.)."
Murthy's solutions include the realization that KM strategy must be fully aligned to the strategic priorities and business goals of the company - the very reason he was chosen for the job in the first place.
Elsewhere, the inability of knowledge managers to put a business solutions spin on KM has led to its fragmentation into component parts that are more successfully positioning themselves as critical success factors. Customer Relations Management (CRM) and its spin-offs are good examples.
Customer relations, in the CRM model, engages an interdisciplinary force that includes public relations, marketing, sales and R&D among others. It offers a problem-solution approach that lends well to proposals based on critical success factors. In fact, it fits so well that CRM has proven to be recession proof because it focuses on initiatives that will help the organization through a downturn. KM advocates grouse that CRM is a slice of the KM pie, but not the whole plate. Yet, they have to concede that CRM advocates have found a way to make a major piece of KM essential to the business agenda.
KM advocates are in a hurry to establish cultures, processes and systems throughout the organization. But even during the recent euphoria of a high-flying knowledge-based economy, few organizations bought into the adoption of KM all at once. Since most successful KM projects start small and hope for an eventual spread to the entire organization, KM proposals should support company needs that KM can get its arms around. Many believe a "grand plan" for KM will collapse under its sheer weight, while incremental steps - though slower - are more deliberate and more likely to get the KM program where it needs to go sooner, not later.
While other knowledge managers have met sustained resistance to the KM strategy, champions like Edvinsson and Sooknanan have deliberately plodded along through years of effort to grow from a few good projects to organizations that consider KM an integral part of their business strategies.
Sooknanan's mantra has been "Think big, start small, and build incrementally." The WSIB initiative began with one small department working on one big system-wide problem - how to find, share and leverage best practices.
"Our humble start," he says, "opened a door of huge opportunity as other branches, the rest of the IS Division and all other divisions in the organization gradually jumped aboard as the KM solution grew from a localized grassroots practice to an organizational priority. In our 'grassroots' experience, we found that if you have a 'champion' at the senior level and someone or a small team to drive the initial start-up, that is probably the bare minimum you need to make a difference."
Small successes not only led to support at the top of the organizational chart, but at the bottom. Other managers and individuals began to see how KM strategies could help them help the organization achieve its critical success factors.
Too often, KM programs have failed because they were rolled out with a "Hey look at this cool system thing!" mantra - shades of the snake oil salesman. One KM maven recently expressed his concerns over such an approach:
"My company has recently rolled out a 'KM' repository, with a very nice note with a link and the password (a new and, need I say complicated, password) which is necessary for access. I had a couple of thoughts as I looked at the announcement. First, while the announcement made many of the right noises in regard to the value of KM, it really didn't address the WIIFM (What's In It For Me) of the new system." Then, "I am afraid when the next cool thing comes along KM will tend to lose momentum, without most folks ever realizing what it was about in the first place."
What seems to be missing in this description is even more telling - a lack of explicit purpose, both for the organization and for the employees who will be expected to carry it out. Philosophies, perceived knowledge value, ideals, processes and systems by themselves just aren't very appealing from top to bottom of an organization. No WIIFM, and no WIIFTO either (What's In It For The Organization).
No one would propose that knowledge use advocates tumble completely into a pragmatic pit, but reality is that as right as KM is in theory, in practice it is faced with an increasingly difficult fiscal challenge.
David Skyrme, of David Skyrme Associates, Highclere, England, says there are only three main planks on which to justify KM:
- Asset value
- Benefits potential
- Cost effectiveness
He calls them the ABCs of an unassailable business case for knowledge management and says they are interrelated since specific initiatives could affect all three, and particular outcomes could be put into more than one category. But he admits there are roadblocks to making a watertight case. For example:
- Lack of a baseline.
- Immediate cost vs. long term benefits.
- Lack of shared management vision.
- Too much focus on financial indicators.
- Tenuous links between cause and effect.
Carl Frappaolo, whose Delphi Group advises more than 20,000 clients worldwide and conducts numerous KM audits annually, observes that the frustration of quantifying KM has increased dramatically over the past year as the economic conditions tightened.
"The question of measurable value is asked with far greater frequency of late," he says, "a symptom of the state of the economy. KM is not supported simply with a management vision as it was a year ago. Today CEOs and CFOs are asking for hard dollar returns."
Here are some of Delphi's answers to hard dollar questions:
- A federal lobbying group was looking to increase productivity without increasing staff and personnel costs. A KM audit revealed that many knowledge workers spent 20 percent of their time looking for precedent, in-house expertise and general knowledge external to the organization. It was also found that it took about five years for an employee to become proficient at it. A KM proposal promised to cut staff research time by 50 percent and virtually eliminate employee acclimation time, freeing up staff time to engage in innovation and production.
- An aerospace company was facing production problems because employees were frustrated by senior managers who asked them to be innovative but often publicly squashed innovation. It was discovered that a lack of a clear and well publicized corporate mission statement confused workers. The KM solution was obvious.
- A pharmaceutical company selected team leaders based on seniority. Drug development teams said they were at the mercy of their team leaders with the regard to knowledge practices and, ultimately, in the success of a drug's approval by the FDA. Team leaders needed to be savvy in cultural development and team building, not drug development. The root of the problem was in the selection of leaders and the culture they created.
The list of KM application opportunities is endless. What is most important is that you begin finding these stories within your organization, and developing proposals for KM initiatives based on the right critical success factors - the ones that matter most to management, that obviously call for the KM solution, that have a high probability of success because it is a KM problem, and that can be replicated elsewhere on the critical success map.
If the conceptual nature of KM still makes you think of yourself as a snake oil salesman, consider this story:
One of those American snake oil salesmen in the late 19th Century was a druggist in Atlanta, Georgia, by the name of Dr. John Stith Pemberton, a former Confederate officer. On May 8, 1886 he invented "Coca" syrup in a 30-gallon kettle hung over a backyard fire. It was soon marketed as a "brain and nerve tonic."
Later that summer, a customer wandered in complaining of a headache and asked the "soda jerk" to pour a little of the Coca syrup he had just bought into a glass of soda water. It tasted great and soon after Coca-Cola was sold in carbonated form. Pemberton's bookkeeper suggested the name Coca-Cola because it described the two main ingredients - extract of coca leaves and cola. By 1905 the coca (which contained traces of cocaine) had been removed (probably because of the Collier article) and it was no longer sold as a patent medicine.
But to this day, people ask for the fizzy brown stuff by brand name, even though they can't identify it in blind taste tests or even if they don't care whether it's Coke or Pepsi. The critical success factor for Coca-Cola was (and still is) marketing.
Find the right critical success factor and your next KM proposal will get someone's attention - even if the product really is snake oil!
Jerry Ash is Senior Counsellor, The Forbes Group and
Chief Executive, Association of Knowledgework www.kwork.org
Article used with permission