Thought Leader

Transparent intellectual capital improves KM

PUBLIC UTILITY service companies traditionally provide the backbone of any economy. They arrange the supply of energy in the forms of electricity and gas, water and sometimes waste disposal too, and are generally best liked when not really visible in daily operations.
So what do utility companies and knowledge management companies have in common? When I started to work for Energie Baden-Württemberg AG (EnBW), one of the largest utility companies in Germany, as a consultant four years ago, I had the general assumption that utility sector companies cultivate monolithic structures to profit from regulated markets and established long term contracts.
Of course, I was dead wrong – but I needed a few years to find out how wrong I was. Even though large parts of utility services are established routines, all business units expect higher productivity from intellectual capital management.
A first round of assessment on the status quo of intellectual capital at EnBW was completed two years ago. In the meantime, the external environment encountered several changes such as the liberalisation of the German energy market and substantial rises in energy prices.
The second round was completed just a few weeks ago. One of our most striking findings was a larger-than-expected shift of relative scores for various drivers of Intellectual Capital (IC) in both relative strength and relative importance within the enterprise.
The lessons learned?

Transparency of the status quo of IC on the level of the business unit is possible;
Success or failure of KM measures is easy to assess;
Changes in relative strength and importance of IC within a period are traceable and worthwhile to check;
More efficiency in KM and better selection of the right measures is to be expected.

Investigating the causality of changes revealed that several initiatives in developing managerial competencies as well as improving internal knowledge transfer actually do deliver measurable impact. Particularly, improvements in systematic management of IC drivers have a long term effect on both quality and quantity of the same driver.
Isn’t this obvious? Definitely, but why then is the prestige of KM in small and medium-sized enterprises still low? Why are many KM projects targeting effects and not sources of problems?
With the availability of cost efficient, easy to use and reliable tools for the assessment of IC, I firmly believe that low esteem for KM is going to change.
In the case of EnBW, the initiatives to develop a knowledge-sharing culture, which was started years ago, already show visible results.
With transparency of IC, the whole agenda of innovation, development of human capital and integration of IC into value-generating processes gains strength in its own terms and – given a little bit of good luck – will get regular attention.
How can we transfer learnings from the commodities companies to other parts of the economy? Will the public commodity industry be a new leader in knowledge management?
I do not think so, but if these organisations, famous for their stability and long-term orientation, adopt new methods of IC visualisation, I bet, the rest of the gang will follow sooner rather than later.

Dr. Manfred Bornemann works on Intellectual Capital Reporting and Development in SMEs and larger companies. He can be contacted at Manfred.bornemann@akwissensbilanz.org