Knoco Ltd.
Knowledge management Valuation
What service do you need?*External assessment and
benchmarking |
Knowledge management ValuationMany knowledge management champions or knowledge management team leaders have found themselves in the position of being asked, by their management, to estimate the value that a knowledge management program will bring. Case StudyOne of our clients has production facilities in many countries of the world. Water is a major component in their production process, and the company is facing pressures (both environmental and economic) to reduce water use. Benchmarking allowed the company to recognise a wide variation in "water use per unit product". Some facilities were very sparing with water use (especially in South America and Africa) while others were more wasteful. There was significant potential for identifying knowledge and best practice from the sparing facilities, for reuse by the wasteful facilities. The company identified the benchmark water use performance, which they set at the bottom of the top quartile, and then aimed to set up a community of practice with the aim of moving the wasteful performers 10% closer to the benchmark. Even this relatively modest knowledge management target was worth $7 million annually. Why is it important to understand the business value of Knowledge Management? The answer is a simple one - if you understand the value, you understand how much you can justify investing. Our advice to clients is to form a reliable and justified estimate, as early as you can in your Knowledge Management activity, of the scale of the prize. If you understand the scale of that prize, you know how much you can invest to deliver it, and you are better placed to meet challenges to that investment. We will help you work through a valuation calculation based on your historical and current performance data. In order make some sort of estimate of the return knowledge management will deliver, you will need to decide which business metrics knowledge management will impact, and by how much. Value will come through increasing the volume of your business by increasing market share, or by entering new markets, or through increasing margin by reducing costs (and costs can be reduced in a number of ways) or by increasing price. An understanding of how knowledge management will impact these variables, plus reliable historic performance data, allows you to value your knowledge management program. |
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Last updated Dec 2009. Contents Copyright Knoco Ltd.