In the 1964 movie Doctor Strangelove or: How I Learned to Stop Worrying and Love the Bomb, the doomsday machine (a device that would cover the globe with a radioactive blanket, destroying all forms of life, which would be automatically activated if any nuclear device was detonated) was maligned as being ineffective if your opponent was unaware of its existence. So it is with intellectual capital and organizational knowledge. If this capital and knowledge is not made available to the rest of the organization, it's worthless.

Intellectual Capital

What is intellectual capital? Intellectual capital is:

  • Organizational knowledge as well as industry knowledge,
  • The ability to apply skills to complex situations,
  • Cognitive knowledge through training and experience,
  • The system understanding of cause and effects,
  • Knowing how the business runs,
  • Knowing how to avoid the minefields, and
  • Knowledge of how to find information, who knows it and where to get it.

Power is not knowing all things yourself but knowing where to find the information. Thus, intellectual capital is an organizational asset along with inventory and accounts receivable. The accounting community will not let it be shown on a company's books, but it is sometimes part of the "goodwill" entry when a company is acquired.

Preserving Intellectual Capital

The problem today in many organizations is employee attrition; employees retire, resign, transfer to another department or take a job with the competition. Average employee turnover rate is 14.4 percent per year, according to the Bureau of National Affairs.1 These employees have knowledge about their job, the business processes, the data that supports their job, how to make things happen, what works and what does not. Unfortunately, they have no means - or incentive - to share their knowledge. Their knowledge has not been captured; their knowledge has not been transferred or made available to others. This knowledge is lost to the organization.

New regulations, including Sarbanes-Oxley, require documentation of workflows and procedures. Security and privacy rules and concerns including HIPAA, Basel II and the ever-present legal exposures require knowledge of how the organization is run. Global organizations have an even more demanding requirement given differences in language, accents, culture, time zones and communication modes (phones, videoconferencing, email, conference calls and the absence of the water cooler discussions).

HR directors are very concerned with employee turnover. It costs a company one-third of a new hire's annual salary to replace an employee.2 Therefore, HR directors have been tasked to preserve the intellectual capital of their organization, and corporate officers are bound to preserve the assets of the organization.

Intellectual capital is such an asset. The challenge is to capture and leverage the knowledge and to expose it to the rest of the organization by providing a knowledge base that is easily searched. The solution is to capture knowledge from key employees, to store and organize the knowledge and make it available to new hires or transfers (part of training), to existing employees and to employees in other departments.

Metadata

Intellectual capital can be captured in metadata, which would include business definitions, valid values (domains), business rules, data ownership, data sources, data genealogy (how did the data get here), security and privacy, and data timeliness. As intellectual capital goes beyond classical metadata, you will want to capture organizational history, stories of success and failures, postmortems, case studies and corporate culture. In this process, you will be expanding your notion of the types of information that can be captured in metadata. Intellectual capital can be captured in a data modeling tool, with user-defined parameters, definitions and notes with tools such as ERwin (CA), PowerDesigner (Sybase), ER/Studio (Embarcadero), Rational Rose (IBM) and Designer (Oracle). Intellectual capital could also be captured in a variety of metadata tools, including Metadata Manager (Informatica), MetaStage (IBM), Rochade, Advantage Repository (CA), Mega and Persistent.

The types of knowledge that would be relevant are data definitions; business processes; business rules; technical knowledge; culture of the organization; management styles; culture of the industry; history with customers, suppliers and partners; and how data flows through the organization. It includes how customer leads become sales, how the sales become orders, how orders generate invoices, how invoices are paid and how payments become revenue. In short, it is the information supply chain.

Capture Process

The capture process would include structured interviews specific to each department and specific to the types of knowledge the sponsoring manager would deem important. The results of the interviews would be validated for accuracy and usability. A capture mechanism would employ the capabilities of the data modeling tool or the metadata tool. The knowledge repository must be organized to make it useful and accessible. Employees accessing the knowledge base must be able to use a Google type of search using appropriate keywords. There is other enabling technology that can help with both capture and dissemination such as wikis, portals, threaded conversations and concept maps (c-maps).

Socialization of Knowledge

Knowledge builds off of other knowledge; it is cumulative. One thought or idea is built from preceding thoughts or ideas. The Internet and computing technology offer many vehicles for the socialization of knowledge: groupware and collaborative software, wikis, portals, threaded conversations, email lists, online chats, social networking, c-maps and mind maps.

Knowledge Encyclopedia

You can use a wiki as an online encyclopedia; it can be authored by anyone and everyone. Anyone can edit someone else's entry, allowing knowledge to evolve by using prior knowledge as a building block. People, therefore, have a sense of ownership because they are personally contributing to the corporate knowledge base.

There are dozens of wiki "flavors" to choose from. Some are open source, some offer hosting; some you host yourself. You can visit http://www.wikimatrix.org for a great comparison of all the major wikis; as of this writing, there are 75 wikis represented on this site. You can even run a wizard to choose which wiki is right for you.

Beware, however; most wikis are "roach motels." Just like the song "Hotel California," "You can check in any time you like, but you can never leave." You can get the data in, but repurposing it or importing it to another application or use is not possible. This is something you should investigate when deciding to use a wiki. In many respects, wikis make great corporate business glossaries, but because you cannot repurpose the data, you can't invoke the dictionary in other applications, such as a business intelligence tool, for example. It would be nice to be able to get a description and a formula for a field appearing in the data warehouse; then, the user can more fully understand the data when making business decisions.

The Role of Governance

In the past, data governance has focused on control of data transactions. Transactions are the lifeblood of the company and, therefore, must be strictly regulated. Bad data must be prevented from entry into the system because it could seriously corrupt corporate data, reporting, decision-making and the bottom line.

However, the corporate knowledge base is fluid and must respond to the ebb and flow of knowledge throughout the enterprise. As a foundation of knowledge is laid, it must be able to be built upon by others.

Most of the intellectual capital resides in peoples' heads, and one of the objectives of knowledge capture is to reach out and encourage people to share. Too much proactive governance up front will discourage people from sharing their information. Too many constraints upon entering information will make sharing too difficult. Therefore, another strategy is needed.

"Governance lite" enables a compromise using states of entries, allowing anyone to enter anything they want, which would put the entry in a "candidate" state; then when it is approved by a governance committee it would switch to an "authorized" state. Any time the entry is modified, it switches back to a candidate state once again. This enables reactive governance, which does not impede the authors from entering anything they want, and it allows the corporation to sanction entries.

Adding governance lite to wikis requires some programming and enhancement work. Most wiki products allow modifications like this to be added. If this is important to you, you should check it out before committing to a specific wiki technology.

Pilot Project

A pilot would focus on an individual department, such as marketing, finance, HR or even IT. The purpose of the pilot would be to evaluate the usefulness of this initiative, to learn from its successes and failures, and to provide a template for the capture and dissemination of knowledge in other departments.

The pilot would need a strong sponsor, most likely the department manager. The pilot would need a full-time team of two to four people, with the participation and sponsorship of the chief knowledge officer. To get off the ground, part-time does not work for this type of project. The department employees need to be sold on the pilot, but not everyone in the department needs to participate, and those who are reluctant should be able to opt out.

The pilot project should be evaluated for the value it provides. The primary determinant would be the level of access to the knowledge repository. The knowledge repository would have to be maintained and kept current for it to remain valuable. This means ongoing responsibility for its care and sustenance.

This is an example of a pilot that could be instituted in the HR department. Each of the following areas is ripe for the knowledge that could be captured:

  • Employee and labor relations;
  • Employment regulations, state and federal compliance requirements;
  • HR policies and procedures;
  • Health, safety and security issues;
  • Staffing: job analysis, succession planning, the changing and aging workforce;
  • HR development: training, employee development, management development, leadership development, performance evaluation systems and policies;
  • Compensation and employee benefits, incentives and reward structures; and
  • Cultural changes.

Value

The value to the organization of such a knowledge repository is almost incalculable. Consider the collaboration and communication opportunities and peer relationships that could be established. The knowledge repository could be a resource database for various communities of interest. The opportunities for problem solving and interactive sharing are apparent. The knowledge repository could be used for training new employees or employees new to a department. The knowledge repository would be a ready reference when there are problems to be solved. The knowledge repository would house lessons learned on projects from post-implementation reviews including what went right, what went wrong and why, with the creation of organizational best practices. Capturing intellectual capital and the resulting organizational insights could become core and important functions of HR management. Metrics will be useful to indicate usage, to indicate what is and what is not being accessed, and also to give management a feel for the value of the knowledge repository.

Problems

This initiative will have acceptance problems, and management needs to be aware of these challenges. The major obstacle is that some employees will be reluctant to share their knowledge. Knowledge is a form of power; it represents importance and respect and can impact an employee's continued employment. Some reluctance can be overcome by making the sharing part of the employee's performance plans and performance reviews as well as public praise, acknowledgement and listing the contributing author. With common and significant incentives, individuals are more likely to share as they realize, "When you share, we are all smarter."

There will always be some employees who will never share, and there are those who are confident enough of their place in the organization that they would readily share. Teams that work well together will be more willing to share, certainly with each other and possibly with the rest of the organization.

Another place to start would be with employees who are retiring soon. Selected retired employees could be brought back for their knowledge. There will undoubtedly be security issues and possible legal restrictions. Certain parts of the knowledge repository would have security restrictions, and an organization might expose itself to litigation based on the knowledge repository if, for example, a hiring best practice discriminated based on race or gender. If an employee believes that sharing could facilitate outsourcing of his or her job to another country, no meaningful capture is possible, and the employee could not be expected to participate.

Intellectual capital and the knowledge repository can have a dramatic impact on any organization. However, it will only be funded and supported if management recognizes the value of their employee's knowledge, and it will only work with appropriate incentives and an honest orientation on how it will be used.  

The authors wish to acknowledge input from Michael Scofield; Laurie Duthie, UCLA Ph.D. candidate; Charles Leo, Ph.D. and HR director; and The Wisdom of Crowds by James Surowiecki.

References:

  1. Willis Mushrush. "Reducing Employee Turnover." Creating Quality Newsletter, May 2002.
  2. Bonnie O'Neil. "Launching a Corporate Glossary." TDAN.com, July 2005.

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