Tim Wood Powell     The value of knowledge

Once again I was called on recently to speak to Columbia graduate students on knowledge metrics, a topic that combines two of my favorite interests — and seems to be a favorite among my audiences.

Metrics form the key to ROI and the production of value — and therefore essential in all aspects of management. Metrics of our own performance, comparable against ourselves and against others, empower us to improve that performance.

Metrics are the language of value

“Financial people” (MBAs and those with equivalent experience) are trained in the understanding and application of metrics to their performance and goals, and are typically as comfortable with talking numbers as they are with speaking words. They think in numbers — and some would say that they even dream in numbers!

Not so “knowledge people.” They may be uncomfortable with, or even resistant to, using numbers rigorously to describe their performance. This can lead to a situation where there is little shared understanding — or even basis for informed discussion — with the financial types who drive most significant enterprise decisions. I call this the knowledge-value gap.

In most organizations, if it comes to a battle between numbers-friendlies and numbers-phobics, the friendlies almost always win. Metrics are literally the language of value and ROI — and therefore the language of most senior management, boards, and external stakeholders.

Knowledge people must learn to “talk numbers” or risk being left out of the most significant strategic conversations in the enterprise — including those involving resource allocations (e.g., budgets, staffing, etc.)

Seven steps to improving Knowledge ROI

How do you bridge this knowledge-value gap that lurks, eroding value in so many organizations? What is the roadmap?  I ended the session by sharing with the audience these steps that will speed them on their journey toward metrics-literacy and knowledge ROI:

1. Understand the enterprise value system.  What does your client organization measure and reward? Each organization has its own purpose and mission, enterprise metrics, KPIs, and so on. Start by understanding how the organization thinks and communicates about value, both internally and externally.  Note that aspects of this will be verticalized, i.e., specific to the client’s industry.
2. Link knowledge metrics directly to these existing enterprise metrics. This linkage is the primary source of strength and ROI for a knowledge initiative.  Knowledge goals and metrics become less relevant the farther they are from organizational goals and metrics.
3. Identify behaviors you are trying to produce, optimize, or change. Metrics work — because they drive behavior within the organization. Which behaviors are working in achieving desired enterprise outcomes, and which need to improve?
4. Measure what matters.  Develop metrics for those behaviors in a way that is most effective for the benefits (i.e., Results, Outcomes, and Impact) you are trying to achieve. This requires a deep understanding of cause and effect.
5. Bend the value curve. Engage available value levers to drive benefits up, and costs down. This point gets a little involved, I’ll explain this in a separate post.
6. Monitor and anticipate. With each metric comes the risk that people will “work to the metric” — and not to what really produces value. Once operational, metrics should be assessed periodically to insure they are producing the desired outcome
7. Add value continually. Adding value is not a one-time event — it’s an ongoing process driven by a deep underlying commitment to thought leadership.

We wish you, all our readers and supporters, the happiest of holidays — with our best wishes for success and fulfillment in the coming year.

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