Regular

posted 6 Dec 2005 in Volume 9 Issue 4

Taking KM to the edge

A knowledge audit is an essential step to take before implementing new collaborative tools. By Michael Allen.

This is the first in a two-part study examining the role of the knowledge management (KM) audit. While this article will focus on the KM audit at the Driver and Vehicle Licensing Agency (DVLA), the second will examine the KM audit concept in the wider business environment and ways to review the boundaries of business and core competency.

Of course, the KM audit method used at the DVLA was designed for a public sector organisation, but I believe there are many generic lessons that can be drawn from it and applied to the wider corporate world.

The DVLA has been managing the registration of vehicles and drivers for more than thirty years. Today, it issues seven million driving licences, nine million registration certificates and responds to more than 24 million enquiries from the police and customers on licensing and vehicle registration issues every year. It also collects £4.9bn of vehicle excise duty on behalf of the Treasury.

In short, the DVLA is a complex organisation with a turnover similar to that of the Co-operative Group, for example, or publisher Reed Elsevier.

Starting point

The goals and ambitions of any organisation will usually be stated in its mission or ‘vision’ statements, and will be further defined in its corporate strategy. In general terms, a knowledge audit should focus on the knowledge-sharing capacity of the organisation – in what ways and to what extent knowledge and information is moved around the organisation for business benefit.

These are issues that relate to efficiency and effectiveness and reflect the increasingly popular view in management theory of the need to understand the ways in which resources and capabilities can be used to develop and protect core competencies.

In central government, the value of this approach is often reflected in the way in which the various information resources can be bundled together to improve customer experience, internal efficiencies or to develop more effective communication processes. The sunk cost investment in information in any organisation is huge, whether this is in the form of computer systems, storage, training or communication networks. Yet inefficiency in the utilisation or communication of information, not to mention ‘leakage’, is often an unknown resource loss.

The main purpose of the audit, therefore, is to help key managers better understand the knowledge value of the organisation. Many of the aims and objectives of organisations emphasise flexibility, lightweight managerial structures, fast response to customer demand, inspired product lines and innovative approaches to business or service delivery.

These goals require a number of KM elements to be achieved: existing and future knowledge needs to be understood; internal and external information transfers need to be efficient and secure; and appropriate levels of alignment must be made between present and future systems of delivery. The audit will need to focus on the business value of knowledge sharing, the existence of which cannot necessarily be taken for granted among key stakeholders. In general terms, there will be a need to:

Capture and transform knowledge to meet key business goals;
Increase the accuracy and relevance of who knows what;
Ensure appropriate communication processes are in place;
Embed a knowledge-sharing culture within the organisation and its partners.

These can be regarded as the key processes of KM. In the second part of this article I will suggest ways of putting measures into place for knowledge management.

At a more general level, KM can be structured upon a broad specification to meet business requirements. These can be summarised as systems and cultures that better enable and support:

Access to business critical information and knowledge;
The motivation to appropriately store, manage, retrieve and share;
Understand the value (and real cost) of information and knowledge to the business.
The DVLA knowledge audit started from a basic analysis of where the anticipated future requirements of the business might lie – where did the organisation wish to get to?

The starting point for any KM audit therefore (and, indeed, the introduction of any new managerial concept) lies in the business objectives. Key stakeholders need to be interviewed at this stage, partly in order to flesh out some of the background to those objectives, but also to better understand the potential areas of contribution for KM. This information can then be used as supporting material to the results of the audit itself.

Preparation

A KM audit can be conducted using many methods – stakeholder assessment, focus groups, systems surveys, social network analysis and many others. At the DVLA, we decided to use an anonymous questionnaire to give the first cut of understanding the broad knowledge-sharing position of the agency. A questionnaire alone was used as this would give a fairly unambiguous rapid analysis. Such a view would help us understand the future requirements as the organisation transformed to meet new external demands and internal processes.

The initial questionnaire was distributed to everyone in the organisation across the various functional and geographical networks. The questions – nearly 40 in all – were built around the three areas of access, motivation and value.

We made sure that there was a mix of questions; from ones that demanded straightforward factual information, to others that enabled respondents to give their opinions. For example, on levels of trust in the accuracy of information and the quality of accessed information. The question sections also had free text areas where respondents could add any comments they felt necessary and these proved to be very valuable in eliciting extra information. The majority of returns were handled electronically, but paper returns were entered manually to enable the results to be distributed quickly and in a variety of presentations to meet differing user needs.

After the questionnaire was designed, it was first tested to remove initial levels of ambiguity and then trialled with a test group of typical staff at various sites and levels in the organisation. It goes without saying that we aimed for as user-friendly style as possible, avoiding any KM jargon, to make the survey as easy to answer as possible. There was a balance between making people think seriously about a subject and making the survey too long or complicated to complete.

Audit outcomes

A KM audit will ask a range of questions, some of which will be universally applicable and some of which, obviously, will be organisation specific.

We defined KM at the DVLA as ‘the process of structuring and utilising information and knowledge in a way that supports critical business areas’. Such definitions will vary to some extent according to industry sector, as well as the structures and systems in place at any given organisation. One point to be stressed, though, is that KM should now be approaching a new stage of implementation, at a strategic level, as a second-generation activity.

There will be high-level outcomes from the very fact that an audit has been made. By including all staff, it automatically raises the profile of KM activities in the business, especially if it is new, or it is being refreshed. The audit will give the basis for a systematic evaluation, based on the following questions:

How do people work and interact?
Do we have the most appropriate systems, both organisational and cultural?
How do people get the information and knowledge they need?
Is there standardisation of information transfer process?
How well do we collaborate and share?
Do we learn from experience?

The audit addressed all of these issues. They are all action-centred, and the audit is one way of answering the key question, ‘do we know what we know’? We looked at effectiveness in sharing knowledge, both overall and by level of authority in the Agency. Questions on gaining and using explicit knowledge were based on staff perceptions of strategic aims, quality of received information and the efficiency levels of information transfer. Following the audit, we could start to put numbers against the previously anecdotal evidence of how knowledge and information is shared across the business.

Factoring in the softer areas of management – the ways in which culture and organisational structures could be assessed and considered alongside other existing measures, such as the staff attitude survey – helped to give a more balanced view of the knowledge-sharing capacity of the business. The answers to the questions about the value of information helped us to better define ‘the way we do things’ at the DVLA’.

The audit established a baseline for comparison and helped us define the core measures for the impact and effectiveness of KM in the DVLA, which will be reviewed in the next section. It also enabled us to have a greater level of certainty in reporting KM measures in, for example, the knowledge sharing indicators of the DVLA balanced scorecard. This measure is based on the Kaplan and Norton Scorecard – within the ‘People, Organisation and Learning’ category there is a specific area on knowledge sharing.

Obviously, a KM audit is a piece of analysis. It will almost certainly run alongside other pieces of work in the KM environment. The first attempt at a survey may not seem to reveal much, but it is a step – and a vital step – in building a more comprehensive understanding of the impact (actual and potential) of knowledge sharing. It is a map that helps to justify the priorities that are being given to KM initiatives.

Although an audit is only a piece of analysis, it can also be used as a communication tool. People who take the trouble to complete a survey want to see the results – so make sure that feedback is quick. At the DVLA we published the audit on

the intranet and grouped into themes the free-text comments before putting those alongside the main survey results. There was a common discussion area where staff could make their own comments. The organisation’s directorates were given comparisons between the whole view on all the questions and the responses from their own areas of responsibility. Mostly these were presented visually, in pie charts.

Lessons learned

While it was a successful exercise, there were still lessons that could be learnt about the way the knowledge audit was conducted at the DVLA.

I think we treated the audit too mechanically, as part of the ‘KM toolkit’ and as one of the early processes. In a sense, this was correct: at a green field site, you need to see where the ‘hedges’ are at the boundary of the field. If a small team is actively working on a number of projects, there can be a tendency to just tick the box for ‘audit’ and to move on to the next project.

An audit can be used for providing more than just a snapshot, and we have started to deliver more responses based on this early work within a wider context. The early pilots on electronic document and records management have been informed by issues on information overload, communication paths and e-mail integration, which were raised in the audit.

There is a need to see this in the bigger picture – focus groups, learning paths, communities of practice, informal communications, innovation paths and creativity. The next article will take a macro-level view of KM in terms of organisational boundaries and structural design and will propose measures that may be put in place to put qualitative data on the impact of better knowledge sharing. This, in turn, raises questions about the relationships between people, IT and culture. n

Michael Allen is head of KM at the DVLA. He can be contacted at:

michael.allen@dvla.gsi.gov.uk

What was the audit looking for?

DVLA wants to manage the knowledge that is most important to the organisation by measuring how well information is shared and used to best effect. This knowledge includes:

The combined knowledge of all its employees;
Data it holds and uses;
Information stores, paper or electronic;
Documentation or systems that describe how it does its business.

At present there is uncertainty about the extent of knowledge at DVLA, so how do we know:

What knowledge we hold?
Where it is located?
What its value is, including synergy benefits across the business?
If there is a danger of losing information and knowledge?
Are we getting a good return on the investment we make in knowledge acquisition and transfer?

Based on survey findings, the questionnaire will establish a starting point to answer some of these questions, and provide a baseline for understanding a knowledge-sharing culture. The audit will help illustrate how knowledge is stored and shared at present in the DVLA. It will help us to develop a strategy to improve the formal and informal channels by which we share information and knowledge. The aim is to ensure that all geographical and functional areas of DVLA have the same sets of opportunity to share knowledge and to learn.

The theory behind the knowledge

Management guru Peter Drucker long ago drew attention to the belief and knowledge systems through which underlying assumptions govern the ways in which we understand reality, defining the boundaries of the possible.

In Drucker’s view, this image or ‘paradigm’ provides the glasses that we use to see our world. In any organisation, the prevailing paradigm can help shape which areas of business are included and which are excluded: a paradigm provides the intellectual boundary within which work is completed. At an extreme level, this is seen as silo mentality.

In order to move away from this approach, in Drucker’s terms, requires “a final new management paradigm: Management’s concern and management’s responsibility are everything that affects the performance of the institution and its results – whether inside or outside, whether under the institution’s control or totally beyond it”¹.

Given that information and knowledge, including access to and use of knowledge in a firm, will have a significant impact on the relevance of the paradigm to business, a KM audit can be a significant contributor to an organisation in its quest for an understanding of everything that affects the business.

This ‘everything’ – the varying internal and external factors that can affect the business – is, of course, increasing in complexity. We introduce new technologies to make sense of the information, but as Tom Peters, another noted management theorist, points out, it is people who make sense of complex worlds: ‘It is the great paradox… this is the age of intranets… the Internet… virtual organisations… wired-up organisations. And yet… you can wire yourself up until you are blue in the face (and broke)… but in the end it’s a people’s game’².

Strategy is all about preparation for the future: managing resources, managing risk, managing the environment – as far as these are possible. But there is always a degree of speculation, to be first to spot the next big trend. Business Week exhorted its readers recently to, ‘Listen closely. There’s a new conversation underway across America that may well change your future. The Knowledge Economy as we know it is being eclipsed by something new – call it the Creative Economy’³.

Increasingly the focus of attention is moving to how business can leverage the critical assets of information and knowledge to gain sustained competitive advantage over time.

A knowledge audit can be used in this context to give a view of how the organisation sees itself in terms of its information, knowledge and understanding. It is a means of assessing, to some extent, the paradigm of the business, giving a snapshot view of the culture and outlook.

References

1. Drucker, Peter. ‘Management challenges for the 21st Century’. Butterworth Heinemann.1999.

2. Peters, Tom. ‘The circle of Innovation’ Coronet.

3. Business Week, August 2005. www.businessweek.com.