It shouldn’t be a surprise to anyone by now that we are facing one of the most severe economic downturns ever (possibly the worst — history will tell). One response to this is to go on the defensive. This is a tactic that anyone can adopt. The whole business can decide that the best way to cope is to defend its existing position. Some of the investment banks have tried this and failed. The US auto industry has also adopted this strategy with little success so far. Individual business units or cost centres can also go down this route. Mary Abraham has a blog post showing us how KM teams might defend their position in the hope that they avoid the worst effects of cost-cutting.
Let’s rewind a bit. How do you know why you have been successful up until now (as a business, revenue stream or cost centre)? What if that success has been a product of factors outside your control — a buoyant economy or demand for your services driven by me-too purchasing or management, for example? If that is the case, you have no position to defend. Your business will fail, or your cost centre will be cut to the bone (or even removed entirely). If your firm has a large knowledge management function merely because everyone else does, it is unlikely that it will escape unscathed even if you can show that it makes a real difference to the bottom line. The only means of survival is to prove that without KM the firm is actually worse off.
How to do this? Joe Firestone has the key . His definition of knowledge management requires that it is used to inform and improve problem solving at all levels of the business. That includes strategic decision-making.
Strategy is a type of knowledge and is itself an outcome of knowledge processing. If the purpose of KM is to enhance knowledge processing, then KM precedes strategy and every other knowledge outcome. To argue the reverse is to grant strategy an exception that it does not deserve. Why should strategy be any less subject to knowledge-production processes than other knowledge outcomes? We call the idea that strategy comes first the ‘strategy exception error’. If KM is to have a future, we must eliminate this error and recognise strategy as just another set of knowledge claims that flow out of knowledge processing.
The most important form of strategy addresses an organisation’s capacity to learn and adapt. Strategies come and go, but in order to survive over the long haul, the quality of an organisation’s systemic capacity to learn and adapt must be high and sustainable. This is ‘sustainable innovation’, the fundamental strategy of every organisation wishing to survive and prosper.
Most of what currently passes for KM initiatives aligned with strategy are really IM (information-management) projects. Their focus is on capture and delivery of information required to support strategy. While valid and useful, these are not KM initiatives per se. The purpose of KM is to enhance knowledge processing, which, in turn, enhances an organisation’s capacity to produce strategies. It is IM that afterwards must be aligned with and support strategy, not KM.
If the leaders of the business are planning their way out of this crisis without using your knowledge management tools and techniques then one or both of the following propositions is probably true.
- Your KM activities are not properly targeted on the business problems that make a difference
- Your business leaders are taking the wrong approach to solving this problem
If either of these is true, the prognosis is not good for your KM team. It is probably more likely to be cast aside when cost-cutting starts to bite, or it will go down with the firm. If they are both true, then the firm is probably going to sink faster than its competitors.
Andrew McAfee shows us a way out of the morass. In “The Enterprise 2.0 Recovery Plan” he asks himself what he would do if he were put in charge of IT as part of the turnaround effort at a big US automaker. His approach would be guided by ten principles.
So what would adherence to these principles lead me to do? I’d roll out as quickly as possible a single integrated suite of emergent social software platforms (ESSPs) to all employees of the company. This suite would include blogs, wikis (including collaborative document production tools like Google Docs), discussion boards, SNS, a microblogging tool like Twitter or Yammer, a tagging utility, prediction markets, ways to vote on good content (a la Digg) and ways to give praise or good karma to particularly helpful colleagues.
This is a really interesting article, especially as it gathers together a number of strands that have permeated McAfee’s work into one location. These are not necessarily IT priorities either — for many businesses, the KM team has taken or should take a lead in driving these technologies that connect people and their knowledge to each other. If you still need proof that the defensive approach has merit, the New York Times has drawn some interesting parallels between Detroit’s demands today and those of the British motor industry in the 1970s and 1980s. (Incidentally, if you want to explore how Austin, Morris, Rover (and Land Rover), Jaguar, MG, Riley and Triumph (and a host of others) went from market leading innovators in the motor industry to a set of brands and factories owned by a mixture of Chinese, Indian and other foreign investors, AROnline has the potential to consume vast amounts of your time.) And if you think that the motor industry suffers from unique problems, you need to check in with Bruce MacEwen .
So, following McAfee’s lead, perhaps we should imagine how KM can help to lead our businesses out of this crisis in collaboration with our colleagues. At least we should bring this article to the attention of the leaders. Otherwise, we need to use our knowledge to locate the lifebelts.
Mark Gould... 
Mark –
A couple of thoughts in response to your thought-provoking post:
First, about costs and cost-cutting. For me, prudent cost-cutting is good stewardship and a useful discipline in feast times and famine. However, its primary benefit is not defensive. Rather, when done properly, it encourages reconsideration of priorities and helps clear the decks so that we can focus on activities that “expand the pie.” In my post I noted basic pie expanding activities such as improving realization and increasing the scope of client services. These are areas in which a traditional law firm KM department can participate, even though engaged in what Joe Firestone might consider information management.
To move beyond basic pie expansion, you most likely need a KM department that isn’t engaged solely in work product focused activities (e.g., precedent creation and retrieval). Instead, you need a KM department that can function as an internal consulting service, helping colleagues across the firm use knowledge management principles and tools to improve business processes and outcomes. This requires KM leadership that can translate KM practices for wider application, and law firm leadership that doesn’t insist on a KM department “cabin’d, cribb’d, confin’d, bound” to unnecessarily narrow definitions of “Knowledge.” In fact, to do this properly, a firm’s view of Knowledge must extend beyond the realm of substantive law to that of the legal business.
– Mary
These are excellent thoughts Mary.
As you say, there is a real distinction between defensive cost-cutting and intelligent restructuring, although they may look very similar from the outside. (I suspect that the best businesses probably think continually about restructuring rather than coming to it suddenly when a crisis hits.)
Your second point is one that I think many law firm KM teams struggle with. They have become so dedicated to the notion that legal knowledge and practice is the core of our work that they find it difficult to expand their thinking to KM for IT or BD. Also, depending on how deeply they have entrenched themselves in the law, they may not be made welcome in non-legal areas even though they might have a valuable contribution to make.