7/17/2015 Liberating Knowledge in the Organization | Ideas for Leaders

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10.13007/020

Ideas for Leaders #020

Liberating Knowledge in the Organization

Key Concept

It is a universal challenge for large organizations: thelarger and more segmented the company, the harderit is to match its people to its problem. This Idea looksat how internal ‘knowledge markets’ can facilitateinformation sharing within large organizations; helpingemployees locate expertise and matching knowledgeseekers with knowledge sources.

Idea Summary

Truly democratizing knowledge requires an openorganization where employees can deliberate, argue,compete and collaborate horizontally across fields ofexpertise. One possible solution to this end is theinternal knowledge market. An internal knowledgemarket is a protected environment where users tradetheir knowledge via price mechanisms. Though suchmarkets have existed in different forms for years, theiruse to facilitate knowledge transfer insideorganizations is relatively new.

The internal knowledge market can be a forum withinan organization that matches knowledge seekers withknowledge sources (for example, branch offices andheadquarters, or novices and experts). They aren’t foreveryone, especially organizations with insufficientscale. As a business grows, however, workingknowledge gets distributed across branch offices anddivisions, and the flow of information stagnates. Thesemarkets can open the flow of knowledge back up.

The research cited here took place in four phases,interviewing more than 30 companies and studyingfive in-depth (IBM, Cisco Systems, HP, Protiviti andSiemens). Also under review were the sources ofinternal knowledge market failures, in order topropose design strategies for resolving them, developbenchmarks, and build an internal knowledge marketprototype.

By learning from what has worked well (and what hasnot) in existing internal knowledge markets, managerscan develop an effective knowledge market design to

ShareAuthors

Benbya, HindVan Alstyne, Marshall

Institutions

Montpellier Business SchoolBoston University School of Management

Source

MIT Sloan Management Review

Idea conceived

2011

Idea posted

January 2013

DOI number

Subject

Knowledge ManagementCommunicationLeadershipOrganizational EffectivenessPerformance ManagementOrganizational Behaviour

7/17/2015 Liberating Knowledge in the Organization | Ideas for Leaders

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can develop an effective knowledge market design tosuit their own organization.

Business Application

To design and maintain an effective internalknowledge market, take the following three-foldframework:

Internal knowledge market design and launch: Best practicesinclude: Use material and social incentives, but let prices float. If acompany tries to set prices in an internal knowledge market, theprice chosen may be either too high or too low. Markets let pricesfloat and produce accurate value assessments. Also companiesdesigning internal knowledge markets can seed the platform withvaluable expert information (i.e. autonomous, distributedcontributors) addressing leading business questions. Also consideroffering points for improving information quality; to overcomeshyness, provide protected spaces; to reduce hoarding, balancecompetition with collaboration; and, protect strategic information.

Market development: when setting up internal knowledgemarkets, executive leadership should function less like a centralplanner and more like a Federal Reserve. This means setting policyfor growth areas of the company’s internal knowledge economyand ensuring maximal use of company resources. It also meansencouraging local initiative and relying less on top-down direction.In addition, organizations can design the internal knowledgemarket to foster pro-social behaviour. Design features can explicitlyencourage norms such as helping, sharing and cooperation. Finally,failures can occur when participants manipulate markets to theirown ends.

Evolution: consider the proper balance between competition andcollaboration. Furthermore, internal knowledge markets have thepotential to provide executives and academic researchers with twoinstruments to help solve the problem of measuring knowledgevalue. First, prices in the knowledge market give managers a senseof the relative value of certain types of information to employees.Second, an internal knowledge market provides instruments toobserve the effects of having access to new information. Datagleaned from knowledge market transactions should provide newways to put a price on knowledge.

Well-designed internal knowledge markets can providea powerful set of tools to help large companiesaddress the problems they face in accessing thewealth of dispersed information and talent. However,introducing an internal market opens a company tonew forms of governance and creates completely newroles for those who would manage expertise.Executives must not only change their tools and howtheir people interact, but also change themselves. Thetrue test of internal market adoption will be whethercompanies begin to use them for critical issues, notjust fringe areas.

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License Notice

This content is provided free-to-accessfor your own personal research,development and private study.

A license must be acquired for use byorganizations, for employee developmentor as a learning resource. To purchase alicense and learn about other partnerbenefits contact us.

Standard terms and conditions apply.

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References

How to Find Answers Within Your Company.Hind Benbya & Marshall Van Alstyne. MIT SloanManagement Review (Winter 2011).

Further Reading and Relevant Resources

Hind Benbya’s profile at Montpellier Business School

Marshall Van Alstyne’s profile at Boston University QuestromSchool of Business

MIT Sloan Executive Education's profile at IEDP

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