Knowledge Value Chain (KVC)

Once again, our radar has failed.

The current financial meltdown is much more than a serious financial crisis. It’s even more than a crisis of confidence. It’s no less than a fundamental abuse of information and its pivotal role in our economy.

When our economy started in pre-historic times, we bartered for goods and services. Then money was invented—first stones, then metal coins, then paper—and finally, ledger entries. No less an expert than Walter Wriston (then president of Citibank) said over twenty years ago that the fundamental financial resource is now information.

Modern information technology long ago dwarfed earlier record-keeping methods. A typical teenager now carries with her several times the amount of data contained in the Encyclopedia Britannica. And these technologies gave us assurance that, to paraphrase the Who, “We could see for miles and miles.” With modern technology and record keeping methods, the story went, we could undertake transactions of far greater scale, scope, and complexity than ever before. And the “systems” would warn us if anything was wrong.

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I recently conducted a KVC Workshop for intelligence producers at SCIPo8’s international convention in San Diego.  During the workshop I surveyed them about their biggest obstacles and problems in corporate intelligence.  We’ve been collecting and analyzing this kind of data now for several years—I call it the “Intelligence Points of Pain” database.

NEWS FLASH:  Intelligence problems and challenges are remarkably similar across different organizations, in different industries, in different countries.  Even as I compare Workshop results from different years, I find the results amazing consistent.

The Points of Pain clustered into major themes, to paraphrase:

• “I’m stuck at the bottom of the value chain.”  People feel pigeon-holed into doing tactical research when they should be doing strategy, not in touch with senior management, being stuck as a data retrieval service, etc.

• “My value is unclear.” Several people report having trouble getting feedback from internal clients on their work.

• “I’m invisible.” People report that colleagues don’t know what they do, how to use them, being “out of the loop”, etc.

• “I’m drinking from a firehose.” The sheer volume of data we’re required to pore over is getting to some of you. It’s gotten much greater since I started doing CI, and I’d predict it will continue to.

• “I’m overworked and under-resourced.” This gets to the value proposition as well, since as your value becomes clear, you will generally gain access to greater resources.

I feel your pain!  In my own work, I’ve heard myself say each of these things at various times.  Some of these problems I’ve solved, some I’ve found “work-arounds” for, and some still challenge me on a regular basis.

Do any of these sound familiar to you?  Please send us your comments below.

It was a weekday afternoon in the fall of 2007.  Though sitting at my desk, I was speaking “virtually” with about a hundred other people around the world who share my interest in corporate intelligence.  Specifically, I was midway through giving a live webinar (hosted by Aurora) on the Knowledge Value Chain®.

A chat message came through on the screen sidebar from the head of intelligence at a large US company.  She said her company was planning an all-day intelligence event, and they wanted to order one hundred copies of my KVC Workbook as a discussion guide for attendees.  This was the largest single order for the book to that point, on that basis I counted the webinar as a huge success.  We left it that she’d call back the following week to firm up the order details.

She did call back the following week as planned…but the content of the conversation was much different than I’m sure either of us had anticipated.  She was calling to say that the event had been cancelled and she would not need the KVC books.  My disappointment gave way to sympathy when she continued that her small CI department was being disbanded, and it was possible several of them would even have to leave the company in search of new jobs.

I realize that things can change quickly in business, and you have to learn to “roll with the punches.”  But I had a feeling of regret in that, if this person had had a working knowledge of intelligence ROI even six months prior to that, I’m confident that she could have addressed the “value” challenge, or even prevented its becoming an issue in the first place.

LESSON:  No intelligence professional wants to be on the wrong end of a discussion about return on investment.  That’s what prompted me to develop the KVC approach in the first place.

Adapted from an article Value Driven Intelligence, to be published in Competitive Intelligence Magazine, fall 2008.

Here’s an excerpt from my chapter in the new book Starting a CI Function (SCIP 2008.)

In each organization, the specific mission for intelligence, and the intelligence plan that supports that mission, will vary.  However, a set of “information deficiencies” that is strikingly similar across many organizations, across all industries, remains.  These include: 

• There is too much information “out there”, and often it’s hard to find. According to the search engine Technorati, the number of blogs is now over 93 million-with 175,000 being added each day. Not all of these have business value—but a surprising number do, and should be on your intelligence “radar screen”. And it’s only going to get worse. A recent study (”How Much Information?  2003“, School of Information, University of California, Berkeley) found that worldwide information production increased by 30 percent each year between 1999 and 2002.
• We can’t even quickly mobilize the information we already have “in here.” A recent study (conducted by Accenture and reported in “Managers Have Too Much Information, Do Too Little Sharing, Says Study“, Marianne Kolbasuk McGee, InformationWeek, January 3, 2007) found that large company managers spend an average of two hours a day looking for data they need-then when they get it, they typically find that about half has little value.  This is due to organizational silos and lack of governance systems that define how and where information is to be shared.
• We’re not sure what it all means, and where it’s going. The science fiction writer William Gibson said, “The future is here. It’s just not evenly distributed yet.” The seeds of the future are in the present—right here, right now.  It’s just that figuring out which events are “trends” that you should study closely, and which are “blips” that you can safely ignore, is not so easy.
• We’re not sure what to do about it.  Even if you had perfect information—which none of us does, or ever will—it is still often not clear what to do about it.  Stanford professors Pfeffer and Sutton (in The Knowing-Doing Gap, Harvard Business School Press, 2000) have described a “knowing-doing gap” that afflicts most companies, and prevents them from effectively using much of the knowledge they already possess.

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We recently had to deal directly with a Very Large Phone Company, on whom most of the businesses in my Manhattan neighborhood ultimately rely for both their telephone and Internet connections.  In the process of getting a new phone system installed after our recent office move, my staff and I witnessed some of the most primitive “knowledge” behavior I’ve ever seen.  We noticed that, at least once a week during our ten-week (!) wait for service, a new team would arrive to scout the connections entering our new building on the street level.  Rarely the same team twice.  And each time, the team seemed to be asking similar questions about where wires came from, where they ran, and so on.  And each time (you guessed it) their report that there were not enough lines coming into the building was oddly familiar.

Our building is a 100-year-old former medical equipment warehouse in the High Line district on the Hudson River just south of the Javits Center—now a thriving art gallery district, and soon to become a thriving business district.  The building was not originally built for telephones.  As a result, connection boxes are in odd places, wires run where you’d not expect—you really have to know what you’re doing.

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I had an experience recently that reminded me how fragile the Knowledge Value Chain really is.  A client had asked for information on the quality of intelligence, a topic that I’ve addressed in many talks over the years.  I looked through dozens of PowerPoint slide shows from these talks, and was printing the slides that were most relevant to his question.

Then, when looking though a file created about 12 years ago, I got an error message that the file was incompatible, and could not be opened.  I tried another file of the same vintage, and got the same message.

After some research on one of Microsoft’s excellent support sites, I’ve come to the conclusion that the software I’m using (PowerPoint 2007, which I find superior in all other respects to its predecessor) will not open the file I’m trying to access.

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 The Wall Street Journal recently (December 10, 2007) ran an op-ed article by two former members of the House Intelligence Committee (Peter Hoekstra, R-MI and Jane Harman, D-CA) under the title “The Limits of Intelligence”.  The article was written in reaction to the 2007 National Intelligence Estimate that claimed that Iran has suspended its nuclear weapons development programs.

However, it contains broader lessons about the uses and misuses of intelligence.  They say, “Intelligence is in many ways an art, not an exact science…The information we receive from the intelligence community is but one piece of the puzzle in a rapidly changing world.  It is not a substitute for policy, and the challenge for policy makers is to use good intelligence wisely to fashion good policy.”

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To illustrate the principles of value creation, consider these two hypothetical vignettes from everyday life.

Vignette 1 - A Visit to the Doctor

You pay a non-routine visit to your doctor.  The doctor’s first question is, “What kind of pills would you like today?”

Your reaction?  You’re shocked at the incompetence, and look for another doctor.  Any doctor that prescribes medicines upon request is little more than a very expensive vending machine.  We expect the doctor’s first question to be something more like, “What is bothering you today?”

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When I started my own business in 1991, my late father showed a more keen interest in my career than he had previously. He had gone into business for himself late in his own career (as a business writer), and I always found his insights helpful. I always gave him whatever papers and books on intelligence I had written, and he always made an effort to read them, and respond “intelligently”.

But one day, he confirmed what I already suspected by asking, “Tim, I’m still not really sure what you, your company, and your colleagues do for a living. Can you explain it in ways that the rest of us can understand?”

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It is said that intelligence is the eyes and ears of the enterprise, and this is a useful analogy in some respects. In the obvious sense, through our eyes and ears we take in sensations that in effect are the “data collection” functions of the human body.

These sight and sound sensations would just be a jumbled mass of nerve cells firing without some kind of sense-making to put them into order. Studies have shown that a newborn baby takes in the same level of sensations that an adult does—but has not “learned” what the sensations mean. (One developmental psychologist called the resulting sensory chaos a “blooming, buzzing confusion.”) As a result, a baby can’t “see” clearly—but only because its sense-making capabilities are not yet developed.

The same is true in organizations. Data comes at an organization continually at a fast and furious rate. Without some kind of sense-making function, it all seems like that same “blooming, buzzing confusion”. A good intelligence function serves as that sense-making function—in addition to being eyes and ears. The KVC model can be used as a template in developing the intelligence function beyond mere data collection, beyond mere analysis—into a real-time strategic direction-finder.

Excerpt from the Introduction to The Knowledge Value Chain Workbook by T.W. Powell.