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Valuing
Knowledge
By Michael Alan Hamlin
September 29, 2003
Just how valuable is enterprise knowledge, you might
ask in the context of the hoopla that surrounds the notion of knowledge
management. According to Philippe Leliaert, a Belgium-based consultant
who specializes in knowledge and change management, it can be worth
billions of dollars. To illustrate, he cites the case of Gary Bloom,
and his November 2000 departure from Oracle Corporation.
When Bloom left Oracle to join Veritas where he is
now chairman, president, and CEO, Oracle's stock dropped 13 percent.
For the previous 12 months prior to the announcement, Oracle's stock
had traded in a narrow range. The sudden drop "wiped away US$22.414
billion in market value," Leliaert said last week in a seminar
conducted for local managers interested in learning how to better
leverage the information floating around their companies.
"Does this mean that one person is worth that
much to a company?" Leliaert asked. "Of course, there
was an over-reaction by the market to their perception of how this
event related to the cohesion of Oracle's executive team. Oracle
CEO Larry Ellison is widely regarded as a difficult man to work
for, and perhaps the analysts were expecting Gary Bloom to take
over from Ellison."
Over reaction or not, however, Leliaert was quick to
point out that when the stock again stabilized, is stayed about
10 percent below the level it had been at before Bloom's departure.
In analyzing the reasons why, the Financial Times suggested that
Bloom, "was an important man in terms of Oracle's internal
efficiency and workflow processes." If they suffered as a result
of his departure, so would profitability.
"But," Leliaert said, "I wonder what
Bloom had to do with internal efficiency and workflow? Surely this
is not a role for a senior vice president in an organization such
as Oracle. The real problem is that investors and analysts have
no tools or techniques to even attempt to estimate the real value
of individuals or even groups of people in an organization."
And neither do most managers.
But what this means is that it wasn't the value of
the knowledge that Bloom took with him when he left Oracle that
caused its stock to dip, but the value of the ignorance of the analysts
who followed and evaluated Oracle's performance. Instead of making
an informed decision on Bloom's contribution to the company, they
made an uninformed at best, and an anecdotal decision, at worst.
What the analysts didn't know probably wasn't known
within Oracle as well, though, because so few companies have gotten
started making serious efforts to understand where knowledge resides
in their organizations, and who wields it. Leliaert calls this a
lack of organizational IC (intellectual capital) mindedness, and
he offered 10 guidelines companies can use to determine their own
IC Mindedness quotients.
The guidelines are meant to focus our attention on
how information is gathered, analyzed, and leveraged in organizations,
but they are certainly not mind boggling insights. Like most important
lessons in life and business, these are simple things that both
work and endure. For those smart enough to pay attention to them,
they are road signs for beginning the process of harnessing knowledge
for competitive advantage.
First among them is organizing creative, or brainstorming,
sessions "to continuously find new ideas to improve your business."
Too many companies waste time demanding answers for why things aren't
working, rather than looking for ways that will work better. Next,
because it's not enough just to generate ideas, organizations should
have a structured way to share information, knowledge, and new practices.
In our own small firm, we do this with a regular morning meeting
every single day.
Third, a structure should exist for sharing ideas.
One of the most common ways of doing this is developing a corporate
Intranet. This isn't hard to do. Anyone who invests in Microsoft's
Front Page receives on the CD a basic Intranet called SharePoint.
We recently implemented SharePoint in our firm, and I've been delighted
that it is the team that has embraced it and made it a real information
tool.
Fourth, is there a way to measure motivation, which in my view is
another word for productivity? It's not technology that produces
enhancements in productivity, and it's not minds. It's hearts. Fifth,
the organization should reward people in simple but meaningful ways
for the ideas they contribute. Otherwise, they will take their ideas
and form their own companies.
Sixth, when a new idea comes up, it's important to put as much energy
into considering future benefits, as costs. Seventh, an open network
that connects customers, suppliers and partners provides the opportunity
to extend the benefits of harnessing internal intellectual capital
along the supply chain. The more minds at work, the classic thinking
goes, but better.
Eighth, continuing education and development ensures cross fertilization
and the energy to produce new ideas regularly. Ninth, mechanisms
should exist that enable employees to address organizational hurdles
in a cross-functional way, so that solutions don't create bigger
problems. And finally, an organization must find ways to value intellectual
property that reflects its true contribution to the organization.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001). Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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