Taking account of organisational knowledge

The Knowledge Audit and beyond …

15 August 2007

Overview

This presentation will cover:

Organisation value

Corporate Knowledge

Knowledge Audits

Knowledge (Process) Mapping

Intellectual Capital Measurement – the bigger picture

Organisation value

Tangible AssetsRelatively easy to measure

Intangible AssetsHarder to measure

‘Bricks and Mortar’

Intellectual Property

Corporate Knowledge

If all of the key knowledge workers left tomorrow, how would this impact the organisation’s value?

Goodwill *

Brands *

Software *

PropertyPlant

Equipment

Corporate knowledge – people are key.

Where does corporate knowledge reside?

26% 42% 20% 12%

Paper Employee’s Electronic ElectronicRelationship

Documents Brains Documents Knowledge Base

Networks Salamander Organization Workforce Survey*

Can you really manage knowledge?Knowledge management (KM) is defined as: “A multi-disciplined approach to achieving organisational objectives by making the best use of knowledge“Standards AustraliaKM is “the systematic processes by which knowledge needed for an organisation to succeed is created, captured, shared, and leveraged.” Melissie Clemmons Rumizen

X %

Getting a grip on corporate knowledge

Where do you think your organisation is on this scale?

How can you be sure?

Selecting the right measurement optionUse a ‘quick & dirty’ Needs Analysis to find knowledge hotspots. A useful precursor to a Knowledge Audit.

Use a ‘no frills’ Knowledge Audit if your CEO just needs an indicator to help to frame immediate knowledge priorities.

Use a ‘fully optioned’ Knowledge Audit including Knowledge Mapping and Social Network Analysis when your organisation is implementing a Knowledge Management strategy to improve processes and practices. Use an appropriate Intellectual Capital Measurement approach when your organisation must demonstrate its value – internally and externally.

Apart from matching the method with the requirement, your choice will be determined by the capability of resources available to do the work, the budget you have and the timeframe you have.

Needs Analysis – what it is & why do it

A Needs Analysis answers questions about tasks and challenges for knowledge workers and managers. It is effectively designed if it:

Allows wide access for comments (e.g. online survey completion) Has a structured format (provide drop down options; buttons) Demonstrates the author’s understanding of the corporate

environment Enables immediate and meaningful communication – feedback

once the analysis form is lodged – AND quick report generation Has the commitment and support from managers – even 5 mins

requires effort

A Needs Analysis raises issues that deserve further investigation.

Knowledge Audits – what they are and why do them“Systematic investigation, examination, verification, measurement and evaluation of explicit and tacit knowledge resources and assets, in order to determine how efficiently and effectively they are used and leveraged by the organisation” Ann Hylton

“The systematic analysis of an organization's information and knowledge entities and their key attributes, such as ownership, usage and flows, mapped against user and organizational knowledge needs” David Skyrme

Knowledge Audits:• Help identify knowledge needs to support organisational goals:• Provide evidence of how knowledge is effectively

managed/shared etc• Show what knowledge exists, where it is, and whether there are

any gaps• Reveal pockets of knowledge – e.g. untapped potential• Show knowledge sources and any sinks or blocks• Provide information in order to tailor knowledge management

initiatives

How do you do a Knowledge Audit?

1. Identify what knowledge exists• Identify explicit knowledge (e.g. snapshots of corporate

information)• Identify tacit knowledge pools (e.g. knowledge networks)

2. Identify where that knowledge resides• Shared drives, paper records, local gurus • Determine sinks, sources, flows, blockages• Map knowledge processes (way it is captured, shared, used &

saved)

3. Identify what knowledge is missing• Assess corporate objectives, skills, competencies against best

practices• Perform a gap analysis - who needs the knowledge & why

4. Report and recommend suggestions for improvement

Knowledge Audit methods

• Background research

• Workshops

• Questionnaires

• Interviews

• Observation

• Knowledge (process) mapping

• Social Network Analysis

Knowledge Audit questions – over to you

What would you say about asking the following questions in an emailed questionnaire?

1. Do you transfer knowledge regularly?

2. Do you think a knowledge portal helps in knowledge sharing and transfer?

3. If this organisation introduces a knowledge portal in 2008, will you use it to share your experience with other colleagues?

Chong & Lee – Re-thinking Knowledge Audit

What are some alternative questions you might ask?

Developing appropriate questions

Take time to prepare

Include both qualitative and quantitative elements

Test the instruments (usability is essential)

No jargon, no bias, no ambiguity

Understand how the results will be analysed and used

Become familiar with tested questionnaires – journals

Seek help from tertiary accredited and experienced knowledge practitioners either in developing and testing the instruments, or in conducting the Audit.

Knowledge Maps (K-Maps)

You also need to VISUALISE the content in a meaningful (useful and useable) way for both senior management and staff who are tasked with undertaking knowledge work.

This is where Knowledge (Process) Maps are useful.

TASKS

ACTIVITIES

FUNCTIONOUTPUT OUTCOME

Knowledge Maps (K-Maps)

People often need to delve deeper and understand the importance and impact of knowledge flows on business outputs and outcomes, they need to look at the organisation’s processes and visualise the relationship with the final business goals.

K-Maps help people understand and analyse the current state and ask the important questions before moving forward. Questions like:

Does the current structure support active knowledge sharing?

Are there information silos within the business?

Is there evidence of duplication of effort within the business?

Who are the subject matter experts and how can I find them?

What should we be doing that we currently are not doing?

Why would you build a Knowledge Map?

The goals of knowledge maps are to:

Set out how outcomes are achieved (how things get done!)

Provide a simple common user experience of how business is organised - how things operate at the all important task, activity, function levels - how they provide the building blocks for delivering outputs and outcomes

Help people understand their roles and responsibilities - help to make business lines ‘join up”

Make workflows visible to both managers and staff;

Deliver self service functionality to clients over the Intranet; and where appropriate

Deploy a quality system for quality standards accreditation to satisfy - audit requirements as established by Government and / or legislation.

How Do I…?

Sources Of Knowledge

Corp. Systems

BusinessOutcomes

K-Mapping

Access Right Application When I Need To

Understand How & Where This Application Helps Me To Achieve The Outcomes

Access To Associated Resources

Understand How & Where The Correct Resource Helps Me To Achieve The Branch Outputs

Understand What Is Best PracticeFor Achieving The Branch Outputs

Understand How The Branch OutputsFeed Into The Corporate Picture

In its simplest form K-Mapping is the process of analysing tasks, activities, functions, outputs and outcomes of an organisation or of a particular area of an organisation and understanding the dependencies that exist.

TASK

TASK

TASK

TASK

TASK

TASK

TASK

TASK

TASK

What are the benefits?

Enables a common language across agencies

Assists you to decompose outcomes

Draws an explicit link between activities you undertake with the outcome being delivered

Identifies efficiencies, deficiencies and implications

Functions are the largest unit of business activity.

They represent major responsibilities that are managed by an organisation/area.

Activities are the major tasks which support and assist in achieving the work function.

An outcome is the end result derived from the output.

Tasks are the lowest level of effort they breakdown the activities.

A cluster of tasks may often seem unrelated.

Tasks can exist in several clusters at the same time.

TASK

TASK

TASK

ACTIVITY

ACTIVITY

ACTIVITY

ACTIVITY

ACTIVITY

ACTIVITY

FUNCTION

FUNCTION

OUTPUT OUTCOME

An output is the deliverable from the function/s.

The following example highlights how K-Mapping (analysing tasks, activities, functions and outputs) helps us to understand the dependencies that exist at each level which support the achievement of a particular outcome (eg: maximising the re-sale value of a car).

TASKS ACTIVITIES FUNCTIONS OUTPUTS OUTCOMES

Change oil and water

Check air in tyres

Replace worn tyres

Replace headlight bulb

>

> Clean the car

Replace faulty or worn

parts

>

>

>>

Service the car

Maintenance

Presentation

>

>Speedometer Cable

A car that is:

Well maintained;

well presented; and

mechanically sound

Car re-sale value is maximised

Change spark plugs

Clean windows

Wash wheels

Vacuum interior

Polish paintwork

InvestBanking

1: PROFIT - Increase profit growth (increase after tax profit) 2: EPS GROWTH - Increase earnings per share (Increase share price) 3: DIVIDEND GROWTH - Increase ordinary dividends (returns to shareholder)

Funds Mgt

Treasury &Commod

EquityMarkets

Investment

Capital Management

EquityCapital Markets

CorporateRestructures

Takeovers

Mergers &Aquisitions

ProjectFinancing

ExternalManag. Funds

Internal Manag. Funds

Hedge Funds

SecuritiesTrading

Risk Management

Trading

EquityFinance

SecuritiesLending

Foreign Exchange Trading & Struct.

Interest Rate & Credit DerivativesStruct. & Trading

Structuring& Placement

Debt Arrangements

Futures, ExecutionAnd Clearing

Commodity, Energy& Finance. Prod

Physical & DerivativesStruct & Trading

TreasuryOperations

Commodity &Energy Finance

Security OfRetail Financial

Services

Wheelchair Access Taxi Service

Credit Cards

Mortgage Origination& Funding

InvestmentLending

Personal Loans

RelationshipBanking

Real Estate

OnlineStockbroking

Strat. FinancialPlanning

Private PortfolioManagement

Full ServiceStockbroking

Executive Wealth Management

PrivateBanking

FinancialServices

InvestmentPlanning

MACQUARIE BANK BUSINESS OUTCOMES

(1,2 & 3)

Banking &Security

Advisory Services

BankingSolutions

Financing& Leasing

RiskManagement

Specialized Leasing

Specialist FundsManagement

SpecializedInfrastructure

Manufact. & Distribut.Of Wholesale & Retail Financial

Products

AssetFinancing

Stockbroking

EquitiesResearch

Provision Invest & Develop. Finance

Develop. OfJoint Ventures

Debt / TransactionStructuring

Management & Develop Assets

Foreign SponsoredTrust Listings

Management Institution Funds

WholesaleProperty Invest

WholesaleEquity Raising

Advisory &Research

Developments &Asset Management

Project Financing & Securitisation

Listed & Unlisted Funds

New SectorInnovation

Internat. Funds MgtJoint Ventures

Corp, Super & IndivFunds Management

Global FundsManagement

Infrastruct. & PrivateEquity Funds

Cash, Fixed Income, Currency & Prop. Funds

PerformanceIncentive Funds

Brand & Marketing

Internal CommsMarketing

E Commerce

Reputation & BrandProtection

Macquarie BankFoundation

Macquarie BankSports

Community Relations

Media Relations

GovernmentRelations

CorpComms

DeploymentNew Technologies

DeploymentNew Systems

Delivery New Systems

Develop. Existing Business Systems

InfrastructureSupport

TechnologyInfrastructure

Deployment Of New Services

CorpComms

MACQUARIE BANKHIGH LEVEL K-MAP

Invest.Banking

Intellectual Capital – what is it?.

Intangible Assets

Intellectual Capital

Human Capital

Structural Capital

Relationship Capitalthe expertise,

specialist skills, attitudes and values held by knowledge workers

the way that agencies conduct their business including knowledge embedded in routines, policy, procedures and systems

the external relationships others have with the agency and can include things like the agency's reputation in the industry sector, customer loyalty and goodwill

Intellectual Property

Intellectual Capital – why measure it?.

Benchmarking (external focus) –

• Industry benchmarks (Gartner, Forrester)• Stock exchange fluctuations• Audit findings (ANAO reports)• Award winners

Comparison against corporate outcomes (internal focus) –

• Performance measures (Balanced Scorecard) • Organisational reviews (internal audits, knowledge audits) • Retention rates• Value metrics (Intellectual Capital measures)

Organisations who seek to measure their intellectual capital do so in order to identify ways to grow it and thereby improve the overall

performance of the organisation and hence its value.

Intellectual Capital – how is it measured?

Intellectual Capital Models “more models than a car show” Melissie Clemmons Rumizen

IC Statements

Meritum Guidelines

Intellectual Asset Valuation

Market to Book Value

Scandia Navigator

Intangible Asset Monitor

Tobin’s q

Balanced Scorecard

Economic Value Added

Intellectual Capital measures for the Public SectorA ‘back-to-basics’ approach to Intellectual Capital is needed to see how a public sector organisation stacks up in terms of its own outcomes and its relative comparative position. This is now the focus of a PHD at the ANU. The background to the research was –

Anecdotal evidence from APS Managers that the way that their organisations measured IC & IP was not appropriate

Comments at industry forums was that often IC & IP was not measured at all

Organisations without measured IC & IP often experience avoidable costs (duplication, gaps in knowledge)

Led to a decision in 2005 to investigate IC & IP measurement in the Australian Public Service.

Currently seeking public sector organisations who may want to participate in this research.

Knowledge takeaways

1. True value of an organisation lies in its corporate knowledge

2. Knowledge Audits can help direct efforts to areas of most need

3. Better knowledge audits use mapping and social network analysis

4. Measuring Intellectual Capital (and then putting in place ways to grow it) can improve performance and add value to the organisation

5. Becoming involved early in research on IP and IC can provide practical benefits to the organisation (including quick wins) as well as helping to build on IC theory

QUESTIONS?ADEPT KM PTY LTD

Ph: 0412 413 922 – Colette(02) 6238 1183

Fax: (02) 6238 0990Email adeptkm@apex.net.aWeb www.adeptkm.com

Colette Raison is completing a PHD at the Australian National University with the outcome of providing practical assistance to Federal Governments in measuring their Intellectual Capital. Colette is seeking expressions of interest from public sector representatives to be involved in Intellectual Capital research.