“It is only in respect to knowledge that a business can be distinct, can therefore produce something that has a value in the market place.”
PETER DRUCKER, Managing for Results
Your enterprise — business, government agency, NGO, even your family or household — has as its ultimate purpose or mission producing value — benefits, outcomes, and results in some specific form, for example:
- Profits and shareholder returns – if you are a business
- Patient health and outcomes – if you are a medical provider
- A better world, in some specific way – if you are a social enterprise or NGO
- Satisfied customers and clients – in all cases
- Productive and fulfilled employees – in all cases
In order to achieve that purpose, and all the goals that support it, your organization takes actions that are based on group decisions. The best decisions — those that produce optimal outcomes — are typically those that are based on the best knowledge (i.e., the most timely, most accurate, most relevant, etc.)
In short, there are direct linkages between (1) how your organization produces value and (2) how it acquires and processes knowledge — that is, how it “thinks”.
What is the value of knowledge?
We believe that knowledge is integral to value — and that understanding and managing enterprise knowledge enables you to unlock value within your organization. Our work builds upon more than a half-century of scholarly research by Machlup, Drucker, Winter and others that supports this conclusion — as well as our results from working with clients.
The Knowledge Value Chain® (KVC) is a structured framework for understanding, accelerating, and optimizing the stepwise transformation of your data into knowledge and intelligence, and finally into outcomes and operating results. Within your organization, this transformation typically happens in the form of knowledge-based processes — business strategy, market research, corporate intelligence, knowledge management, special libraries, and even R&D and legal research.
Those processes occur within a value context — that is, they incur costs and produce benefits. While the costs are usually pretty clear, the benefits often are not — and consequently the opportunities for producing even greater value are often overlooked.
The value chain
If you’re a business executive or analyst, you may know about the value chain, a useful analytic framework applied by Harvard professor Michael Porter at the enterprise level. But did you know that it can also be applied to knowledge work itself — the processes of business research, analysis, and intelligence?
We’ve pioneered ways to do that — and find they open doors to breakthrough improvements in those processes. The KVC methodology manages knowledge production and use as a specialized type of manufacturing process. This simple innovation allows us to adapt management techniques and ROI metrics derived from traditional manufacturing — total quality management, for example — to optimize and otherwise improve knowledge-based processes.
How does optimizing knowledge help you compete better?
“Optimizing enterprise knowledge” may sound esoteric or even mysterious at first — but it has a direct effect on your organization’s competitive performance. Better knowledge helps you win.
Management thought-leader Peter Drucker consistently maintained that knowledge is the single most important factor driving the competitiveness of an enterprise, an industry — even an entire nation. He was among the first to realize that knowledge is neither a theory, nor a nice-to-have luxury — it’s a need-to-have mission-critical resource that you must manage effectively in order to compete optimally.
Is competitive advantage sustainable?
There’s ongoing debate among strategy scholars as to whether sustainable competitive advantage exists outside the picture-perfect world of business textbooks. We don’t see it in our world. Like cold fusion and perpetual motion, it’s interesting to hypothesize about — but it’s not real.
In our experience, advantages in the real world remain largely anecdotal and contingent. They buy you less time than they once did; they erode quickly.
This is not due solely to “disruptive technologies,” nor is it anything new. As Drucker pointed out in Managing for Results — arguably the founding text on business strategy, “Any leadership position is transitory and likely to be short-lived. No business is ever secure in its leadership position.” Since Drucker wrote that more than a half-century ago, history has consistently supported his observation — though market dominance is now measured in years, instead of in decades as previously.
Remember former category leaders MySpace, America Online, Sears Roebuck, Revlon, and Borders? The list goes on…
Knowledge: the sustainable advantage
There, however, is one exception to this general rule. It has been our experience that the only competitive advantage that can (with some effort) be sustained comes from (1) acquiring enterprise knowledge better and faster, and (2) converting that knowledge into results better and faster, than your rivals. We call these combined capabilities knowledge advantage; it’s a source of strategic advantage that is, by definition, self-renewing and resilient.
How do you maximize knowledge advantage?
For more than two decades, we have been working on ways to achieve knowledge advantage for our clients. The KVC framework summarizes our experiences, and builds on the core insight that knowledge is not a cost — it’s an investment. Whether you are a knowledge producer (analyst) or a knowledge user (decision maker), once you internalize this insight, your challenge then becomes maximizing your return (ROI) on that knowledge investment. The KVC methodology guides you in doing this using various process diagnostic and optimization techniques.
How are organizations using the KVC?
The KVC framework is being applied in a range of ways. Its original application was in professional development for knowledge, research, and intelligence practitioners — still one of its primary use cases. The KVC has been presented in business lectures, webinars, workshops, and clinics on four continents, and more recently in the academic world.
But our best ideas usually come from working with our clients. They have consistently challenged us to apply the KVC in innovative ways, for example:
- Research design and management. The KVC can be used, not only to execute research projects and functions, but also to plan and manage such activities. TKA has done this at the enterprise level, as well as at the department and project levels.
- Workflow improvement. A major pharmaceutical company used the KVC to integrate the flow of product intelligence across R&D and sales teams. This resulted in a knowledge re-purposing that increased productivity and competitive effectiveness.
- Business process improvement. A global information and media firm integrated KVC-based metrics directly into a Six Sigma process improvement initiative that includes their corporate intelligence function. This resulted in a more efficient and effective intelligence process.
- Business model innovation. A web-based information aggregator used the KVC to demonstrate how its information product would offer value to customers and generate revenue. The result formed a key element of pitch presentations to potential investors.
- Senior team awareness. A pharmaceutical research organization uses the KVC to educate their senior management and Board of Directors — intelligence users — about the process by which intelligence is produced.
- Management education. Columbia University has used our Knowledge Value Chain® Handbook as a required text in its innovative M.S. in Information and Knowledge Strategy program.
- Career enhancement. Knowledge, intelligence, and research professionals tell us that applying the KVC has helped them differentiate themselves in their own career development.
- Program evaluation. A global NGO is using the KVC to optimize its program evaluation policies and practices.
How can knowledge optimization work for your organization?
But our organization isn’t primarily in the information business — isn’t that really your target? How does any of this relate to OUR business?
In any modern organization, we all use information (to a greater or lesser extent) to “compete in the knowledge economy”. Some of TKA’s clients are, for example, pharmaceutical companies whose products are molecules and compounds that require significant investments in high-level knowledge (in the form of R&D) to discover, develop, produce, and sell. Effective use of knowledge as an economic resource is key to their business model, even though they don’t sell knowledge directly — as a consulting firm or law firm does, for example.
And if you compete in one of these latter “knowledge-as-a-service” industries, or any number of other knowledge-centric businesses, the knowledge-value linkage is nothing short of mission-critical for you.
The Knowledge Value Chain® Handbook is a quick, cost-effective way to acquire the essentials of the KVC methodology that organizations worldwide are using. Get your copy now so you can begin to use the KVC to achieve better results.