In today's ever-changing, dynamic business environment, knowledge and information are key. There exists a necessary connection between the strategy a company needs to execute, the people that need to execute that strategy and the knowledge management and sharing that needs to occur to facilitate that execution.
Indeed, knowledge management and its appropriate use drives sustainable business performance. However, such knowledge management cannot be performed in a "silo•bCrLf independent from the financial performance of a company. An organization that learns and feeds that learning back into operational drivers and actions to optimize financial metrics will outperform its competitors and meet its expectations to stakeholders. The collaboration and the sharing of knowledge across business functions — from financial to operational layers of the business — is key to not only performing but also surviving today's business environment.
It's quite amazing, given how technology and today's modern businesses have matured, to still see that they operate in silos, or as islands of information. Different business functions operate in silos, disconnected to the rest of the organization. Data and knowledge is not shared across the other business functions. They may operate and share knowledge deep in their own silos but not across the entirety of the business. If we think about how a business should operate, then we should see a multidimensional view in which the business shares knowledge across and down the business, and thereby, the organization becomes a "learning organization•bCrLf and not an independent silo.
Employees exist in many areas of the business and operate in a certain business function and level of the company (e.g., a vice president in the operations layer of corporate marketing). It is the connecting of the dots, employees, or rather their knowledge and experiences in the business that makes the business stronger and perform better.
These "experiences•bCrLf or "facts•bCrLf can also be further classified into financial and operational categories. Financial facts are simply that: details of how the company has performed in terms of financial performance. This is important, as employees need to know in good time if the strategy is working and if their actions are supporting the execution of strategic objectives.
Operational facts usually come in the form of unit values, such as volume sold, customer complaints, tons moved, kilowatt-hours supplied or used and so on. But they can also come in the form of anecdotes. This knowledge tends to be more unstructured but is no less relevant or important, and it could be the reasoning behind something, the rationale behind a decision, future prediction of performance of market behavior or an assumption about constraints or resources. Therefore, the blending and sharing of operational and financial information is critical if an organization wants to learn from its actions and perform better.
At the end of the day, businesses exist to make money for their stakeholders by executing on a solid business strategy. Aligning the organization around the execution of the strategy is therefore critical to its success. These four key components (see figure 1) need to operate in harmony:
Ø People need to be in place in the organization, appropriately trained for their role. In order for the right people to perform their roles, they need to be armed with the right information at the right time and be able to consume or contribute to that information or knowledge.
Ø Knowledge needs to be shared across the organization, whether it's structured or unstructured. Either way, this knowledge needs to be passed along to all areas of the business that have a vested interest in achieving the strategic goals of the business.
Ø Technologies and the right tools can ensure that this knowledge is effectively consumed and used. However, one "technology•bCrLf size does not fit all. For example, a CEO would unlikely be a contributor to information but rather a consumer of information. Given this fact, this would suggest a solution like an executive dashboard that shows financial and operational data with supporting "color•bCrLf in context of the information coming from the knowledge management system. Conversely, a marketing manager would be both a contributor and consumer of information/knowledge management. This would perhaps suggest a web-based planning tool for accessing and viewing data, inputting and adding competitive and field information to the knowledge management system, as well as some corporate portal for other knowledge management information.
Ø Processes enable the flow of knowledge and information right across and right down into the organization. These processes can be broken down into two categories: transaction and management. Transactional processes exist at the most granular level of a company and document among many other things how to, for example, record customer transactions, and so on. They are repeatable processes that drive other processes in the business. Management processes exist as a virtual layer above transactional processes and feed management decisions that need to be made. These management processes (or decision processes) are most optimally performed when blended with up-to-date and contextually relevant knowledge management.
The saying "knowledge is power•bCrLf might be a cliché, but it is very applicable when it comes to business performance. Knowing what the business did and how it performed in the past and sharing that knowledge is critical. Blending non-financial and transactional knowledge with financial information is powerful. Gaining a 360° view of your business and customer is critical in winning in today's and tomorrow's environments. These two important pieces of management are often fragmented in a company, and timely, accurate information is often delivered too late and out of date to be of any use, if delivered to the right people at all.
Many organizations have a knowledge management strategy as well as, to some extent, an enterprise performance strategy, but they operate independently of one another. In thinking about how critical it is to adopt a formal, knowledge management system connected to the performance management system, how useful is it to discover that you are losing customers at a rate of 10% of your total customer base per quarter but not knowing why they are leaving you and who they are switching to? Not only is not having the knowledge of why and where they are going frustrating, but it is potentially fatal for your business. That's the importance of not only adopting knowledge management but making it contextually relevant to performance management results to make better, faster and more dynamic decisions.
The powerful blend of Knowledge Management (KM) and Enterprise Performance Management (EPM) is made up from the confluence of performance drivers, people, processes, technologies, data and knowledge. Once the right performance drivers have been established, the people are in place and the right processes to facilitate the sustained execution of the drivers have been identified, an organization needs to share and leverage that knowledge across the organization.
But how does an executive ensure that the organization at every level is sharing and utilizing knowledge? How does he/she know if the use of knowledge management is driving performance or what specific type of knowledge needs to be shared as a priority for the business to perform to expectations?
One way to support enterprise-wide adoption of KM (systems, processes, tools) is by using a scorecard approach — answering, for example, "How many times did this (person, team, department) contribute to the overall knowledge management system? How effectively are people feeding and consuming the information from the system? Are they making more effective decisions as a result of the new information or knowledge that exists? Are they being held accountable for the decisions they are making now that they have access to additional, rich, decision-making information?•bCrLf
Independently tracking your performance and gathering information no longer ensures success or shared learning. Blending the two together, in context of one another, in a timely and accurate fashion is critical to the future survival of a company. The time to focus is now.
Simon Tucker [info@business-foundation.com] is the president and CEO of The Business Foundation, an enterprise performance management advisory firm. Mr. Tucker pioneered a framework for engaging senior executives around business performance and financial management in 2000.
| 
