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The Interpretation of Information

Every organization is challenged with the ability to make rapid decisions and innovate. To do this effectively, decision makers require relevant data and information as well as knowledge management (KM). Many decision support systems rely solely upon the analysis of data, which is insufficient for making accurate decisions. The old adage “knowledge (information) is power” is better stated, “information is power, but the interpretation of information is more powerful.” KM solutions require the ability to combine data, analytics and human interpretation for decision-making.

One constant in the evolving field of knowledge management is that the activities are all over the map. According to Wikipedia, “knowledge management comprises a range of strategies and practices used in an organization to identify, create, represent, distribute and enable adoption of insights and experiences. Such insights and experiences comprise knowledge, either embodied in individuals or embedded in organizational processes or practice.”

What then is knowledge management? Is there any substance behind the verbiage and fancy phrases that are so frequently and eloquently offered at keynote addresses, board meetings and conferences? According to Tom Stewart in an article titled “The Case Against Knowledge Management,” (Business 2.0, February 2002), the question seems to suggest the activities of “building databases, measuring intellectual capital, establishing corporate libraries, building intranets, sharing best practices, installing groupware, leading training programs, leading cultural change, fostering collaboration, creating virtual organizations—all of these are knowledge management, and every functional and staff leader can lay claim to it.”

Innovate or Die
“Innovate or die” is becoming more relevant every day in every company.  It separates the leaders from the followers; those that will succeed and those that may just get by. Successful companies need to enable every employee in every position to be an innovator or risk being permanently sidelined. Solutions that enable employees to engage in KM activities are key elements for innovation.

The focus should be on providing quality information and knowledge to the decision maker. What ensues is the effective and efficient control of the operational environment so that the organization can not only survive, but thrive and continuously enjoy a sustainable competitive advantage. Furthermore, it is only by embracing knowledge management and becoming knowledge-based enterprises that organizations will find themselves prepared and ready to survive and thrive in a dynamic and extremely competitive business world.

The challenge of enterprise knowledge management is illustrated by the typical communications channel found in many organizations, which is radically different from the way communication and the dissemination of information occurs in the social networking paradigm. KM solutions require some of the key elements of social networking to enable the enterprise to drill through all tiers of the organization. To unlock the full potential and enable the human portal within any organization, everyone in the organization must know everyone else.  Mathematically speaking, this is represented by the following equation:

NC = n(n-1)/2

where n is the number of people in the organization and NC is the number of connections needed for everyone in an organization to know everyone else. Even in an organization with only 50 people, 1,225 connections are required to unlock the human portal. Even companies with fewer than 50 employees struggle to effectively collaborate due to the high cost of these transactions using traditional methods such as meetings, webinars and conference calls. The time investment to get everyone together causes even a small organization to sacrifice its ability to effectively tap into the maximum organizational potential.

The Pareto principle, also known as the 80-20 rule, suggests that companies derive 80% of their value from just 20% of their products, customers or ideas. This might be due to the high transactional cost of typical corporate collaboration, through traditional communication channels to leverage business knowledge.  The long tail of that curve, that 80% of uncertain value generators, is typically unexplored. Organizations need to reduce the transactional cost of corporate collaboration, allowing themselves to embrace and explore the rejected 80% of their value generators.

Many organizations fail to capitalize on the wealth of knowledge scattered across their organization because they rely on top-down decision making and centralized  knowledge management systems and technologies. While analytics and data are very important, the interpretation of this data—which can only come from a person—can be more valuable to an organization. Many organizations are not good at transferring implicit knowledge, the kind needed to generate new insights and creative ways of tackling business problems and opportunities. The quality of information is often lost due to the filtered stages of communications in traditional organizational structures. Social networking paradigms have revolutionized and enriched many areas of our lives. Innovation requires a constantly agile mindset and perspective that enables companies to transform to the new business paradigm. These organizations  require tools to leverage KM and social networking concepts to unlock the organization’s intellectual property. Every organization requires the ability to mine its horizontal IP for effective decision-making and innovation, while maintaining its vertical lines of business. To enable an organization to innovate requires a KM solution with a low transactional cost to share, collaborate and communicate effectively across an organization. Organizations must combine data, analytics and the capture of human interpretation for better decision-making.  


References:

Wikipedia.org (2010), http://en.wikipedia.org/wiki/knowledge_management

Wickramasinghe, N. and Lubitz, D., (2007) “Knowledge Based Enterprise,” available at darrenhardy.success.com

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