When I speak this month at the World Congress of Accountants 2002, my key message will be to get people to see beyond the spreadsheet. Too many managers only monitor outcomes, believing that this alone will guarantee better performance. This is no longer the case. People first need to realise that an organisation will perform better if it has a true understanding of its capabilities to perform - and that performance is commensurate with building these capabilities. Understanding how knowledge adds to capabilities is the first step to understanding how to enable an enterprise to provide superior value.

The power of knowledge application first became apparent to me when I participated in community development work in Mexico at the start of my career. I realised then that economic development and self-initiation went hand-in-hand. People can’t achieve their potential until you give them control over what they’re doing. Understanding this made me think about organisational development, individuals’ roles within an organisation and how they assume control over their destiny.

I realised that how people learn gives them the capability to perform better at both an individual level and also at an organisational level. Individuals learn by looking at information and by interacting with others to develop a better understanding of their environment. This same mechanism is at play in an organisation, and results in a more sustainable basis for organisational growth. If people are good are reading the environment and disseminating this information, then the organisation will perform better.

Eliminating the Three Wastes
People work in a digital space today. In my previous role as Vice-President of Strategic Capabilities at Clarica, my aim was to bring them closer together, regardless of wherever they were. A proper knowledge strategy hinges on fine tuning what technology can contribute, making processes move faster and enabling better decisions to be taken faster. We created a technology infrastructure so that people have the knowledge they need at their fingertips when they need it. With strong knowledge architecture in place, as a person realises they need knowledge that they don’t have, they just have to locate the source. This could be through personal consultation - asking a known expert or a community of people - or by going to a knowledge depository in order to discover what already exists on the topic of interest.

As most knowledge workers will attest, an organisation’s knowledge base is often fragmented, rendering retrieval difficult to say the least. On average a staggering 20 to 25 per cent of a knowledge worker’s time is spent looking for the right pieces of knowledge to apply to a problem. If we can make some of this more readily available, think of the amount of time and energy we can save.

Another benefit of knowledge exchange is not just sharing the what, but also the who. It’s not uncommon for several people to be working on the same type of issue at any one time, especially within a large organisation. Having a knowledge depository enables people to link up ideas and efforts, saving duplication and freeing up time.

The "third great waste" is the fact that many organisations depend on one individual being the repository for all knowledge on any certain area. I maintain that this dynamic becomes self-reinforcing, encouraging the hoarding of knowledge and placing the organisation in a highly vulnerable position.

I am frequently asked how to address the resistance to sharing knowledge and I always share the Clarica case. We changed the way that people work by creating virtual teams, which were cross-functional and cross-generational, and getting them to work on real problems in a virtual space. Once our people realised that they need to share their knowledge and work together in order to resolve issues, they understood that there’s nothing to be gained from hoarding information and ideas.

The enhanced communication brought about by working in virtual teams also helps in the organisation’s future development. Knowledge can become quickly outdated. Once individuals have the idea of sharing experiences and ideas, you see a real value creation process start to take place.

Throughout the organization, knowledge must be viewed as a flow. If people think of knowledge as an object, it’s seen as a possession. The flow approach, however, is both more proactive and encourages exchange. Given that we all work in a constantly changing environment, working with the idea of knowledge flows is the way to manage knowledge properly so as to constantly renew your ability to take effective action.

Do not, however, confuse technology with knowledge. Technology creates the infrastructure by which knowledge flows happen. Technology is a necessary but wholly insufficient component in the knowledge sharing process. It makes knowledge exchanges possible, but has no impact on the quality of these exchanges.

If technology is one of the necessary components of knowledge management, the others are building relationships, and understanding the interdependence of people and ideas. These require a high level of trust, building on the ideas of others, and expressing ideas ahead of time. (I will talk about the significance of interdependence in next month's newsletter.)

The Community Treasure Chest
Today, I have no doubt about the forces that are propelling us towards ever greater knowledge collaborations. For the first time in the history of mankind, ideas are more important than the machine. In the past, organisations put a great deal of value on their tangible assets. That dynamic has changed - over the past 15 years the asset base has shifted so that an estimated 80 per cent of an organisation’s value potential comes from its intangible assets, including its capabilities and relationships.

Value creation in an enterprise now depends on the exchange of knowledge. When the machine ruled, people running the machine didn’t need to think too much. Now we need people in a company to concentrate on new ideas and to use their knowledge to generate these ideas and act on them. The business environment is moving faster than ever before, and the importance of first mover advantage cannot be over-emphasised. Organisations need to reconfigure and build more fluid infrastructure in order to face the different challenges ahead.

I have just finished writing a book "Leveraging Communities of Practice for Strategic Advantage", which will be published by Butterworth-Heinemann in September 2002. The book is based on the principle that people learn best by sharing and provides a framework for virtual asynchronous collaboration and discusses how to access the right knowledge communities. These kinds of knowledge communities have an exponential effect. Every successful exchange helps build trust. With this trust, the community builds the foundation for 100 times more collaborations.

While organisations of the future may still have a similar personnel structure as they do today, with different levels of responsibility for different functions, within these sections various kinds of knowledge communities will be at play, helping knowledge flows and propagating learning to generate new and exciting capabilities. Individuals will work in several different partnerships. For example, an accountant could be part of a number of several different knowledge communities, accessing different resources from different sources and contributing relevant aspects of his or her own knowledge to different groups of people. People will search out the top networks that are the best at getting things done. The whole underlying idea is to provide superior value and realise potential. We all have different talents; that’s part and parcel of our respective greatness.

The real paradox is the fact that while technology is driving knowledge management, the people who appreciate its value are those who are best at building relationships. For them, knowledge is a matter of trust, not competition. Those who can build up capabilities by working with others, including customers and other workers in the same field, are those that will win. Organisations that can generate capability fastest have the most to offer, will be part of the best collaborations, and will have the best customers. Partnering is the key idea that will make this happen, allowing complimentary capabilities to take part at the top of the value creation chain, creating unique tripartite value - for the individual, the organisation and the client.

The key issue is trust, which must be based on shared ideals and values. Leadership integrity will determine the width of the collaborative pipeline, and will either restrict or open the flow of knowledge. Finally, there’s the role of technology, which provides the avenues for knowledge transfers. This connectivity allows the flows that create superior value.

Hubert Saint-Onge will be speaking on the first day of the World Congress of Accountants, to be held at the Hong Kong Convention Centre from 18 to 21 November 2002. For further details of the Congress and enrolment procedures, please visit the Congress website on www.wcoa2002.org.

Email to Hubert Saint-Onge at hubert.saint-onge@konvergeandknow.com