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Process 3: Knowledge Audits

Conducting knowledge audits is a key process not only for KM purposes but also for the strate­gic planning phase, both on the enterprise and business-unit levels, for forging competitive strate­gies and tactics. For KM, the main goal is to discover the knowledge resources and networks (flows) that the organization has, should have, and hence the critical gaps in the organization's knowledge resources. A critical knowledge gap is defined as lack of knowledge in a strategic area, inefficient use of internal knowledge resources, or a block in knowledge flows that hampers the attainment of strategic goals. More accurately, a critical gap is that between what an or­ganization does and what it can do with its knowledge. Knowledge audits enable the assess­ment and prevention of organizational memory loss and brain drain, problems that result in undercapitalization and waste of knowledge resources, as discussed in Chapter 4. In particular, this process is designed to discover:

• Available knowledge resources (know what we know):

•   Stores and sinks of explicit knowledge resources

•   Expertise and tacit knowledge resources

• Hidden and undercapitalized resources (we don't know that we know):

•   Key leverage points in the learning process

•   Practices perfected by certain departments (best practices).

• Knowledge resources required to meet strategic objectives (we don't know that we don't know):

•   Blocks in knowledge flows and networks

•   Gaps and unmet needs for knowledge and information

A number of approaches to knowledge audits have been developed: stock or inventory-taking techniques; mapping of knowledge flows and networks; and mapping of knowledge resources. The choice of approach depends on business needs and objectives. Mapping knowledge flows with customers, for example, is of particular importance for service organizations in which strong flows facilitate both customer satisfaction and learning from customers. A comprehensive gap analysis should incorporate the three approaches. The three approaches are presented here as well as a new tool for gap analysis. Once the results of a knowledge audit are gathered and analyzed, a plan should be devised to outline how existing knowledge resources (explicit and tacit) are going to be leveraged through transfer and renewal, and how to put in place the processes for cre­ation of new knowledge. Regardless of the approach used, the audit process can be performed through a mix of interviews and questionnaires sent to all employees of the audited unit or the whole organization. Discussions of results with target groups formed of management and employees should follow to foster ownership of the process for future post-audits. It is important to gain top management's support for the audit, to ensure receipt of maximum response and to ensure that recommendations of the audit report will be considered in planning the KM program. The steps of performing each of the audit approaches are outlined below, including the questions that should be addressed.

Step 1: Stocktaking of Knowledge Resources. The purpose of this step is to determine the explicit and tacit resources of an organization in terms of what is known, not known, and needs to be known at a point of time. It is important to distinguish between explicit and tacit resources, as filling gaps in these two related resources require different knowledge strategies. Abundance of an explicit resource is not indicative of a strong knowledge base if the tacit resources are in deficit and vice versa. This is because the best databases with state-of-art knowledge (explicit resources) do not provide a strategic strength unless complemented by experienced knowledge workers to apply and develop it (tacit resources). Similarly, the best people with the best knowl­edge (tacit resources) can be frustrated by lack of explicit resources that provide the information they need to harvest in moving up the learning curve.

Stocktaking cannot be done in a vacuum. The stocktaking step should be performed for defined key business processes. A preliminary step therefore is to define its context, that is, the critical business processes to which the stocktaking audit relates. The questionnaire should aim at discovering the knowledge resources, whether explicit or tacit, that are consulted in perform­ing critical business processes as follows:

• Tacit Resources

•   Who do you consult and for what areas of knowledge? How often? Please refer to both work roles and areas of knowledge. These questions are designed to discover internal knowledge flows.

•   Who do you contact and in which areas of knowledge outside the organization? How often? These questions assess knowledge flows with external sources.

•   Who are the experts inside and outside the organization who you think have the knowl­edge that you need? This question aims to identify experts through peer assessment.

•   Classify the areas of knowledge in which you are both proficient and willing to share your knowledge. This is designed to locate experts through self-assessments.

•   Who consults you and in what areas of knowledge? This is designed to discover in­flows of knowledge.

•   In what form do you obtain knowledge from these experts and how do you communi­cate? This is designed to assess types of communicating in order to guide choice of enabling tools later.

•   What are the areas of knowledge that you need but cannot find an expert to refer to? This is designed to discover gaps in the tacit knowledge resources.

•   How much time do you spend to locate experts? This is designed to discover flow bot­tlenecks and blocks that affect speed and performance.

• Explicit Resources

•   What are the internal and external information and knowledge resources that you have access to? This uncovers the available resources - the ones we have and know that we have.

•   What are the information resources that you need but cannot find? What are the cate­gories of knowledge you need to perform critical business processes? These questions uncover gaps that are easily ascertainable by reference to the required, but unavailable, knowledge resources.

•   Where and how do you gain access to the knowledge you need? Do you have access to all the resources that you need? Are they in abundance, scarce, or obsolete? These questions aim to discover blocks in knowledge and information flows and later guide choice of document and information transfer tools.

•   How is information being obtained or delivered and when? This is designed to assess the effectiveness of retrieval and search functions and tools.

•   How much time do you spend looking for the information and knowledge that you need? This is to assess the efficiency of retrieval and search functions and tools, and provide targets (in terms of information costs and time to find required resources) that management can aim for and monitor.

To know who knows what and whether knowledge resources satisfy knowledge needs is not enough. The knowledge audit should also uncover dysfunctional knowledge and information flows that hinder knowledge transfer and cause loss of knowledge. Therefore, the information about who contacts whom and for what should be mapped to reveal the internal and external knowledge flows related to critical business processes. Compiling answers to these questions will reveal the explicit and tacit resources that are accessed for critical business processes, the effi­ciency of this access, the required knowledge for increased effectiveness, and to whom others refer as experts and in what areas of knowledge. The auditor should analyze these results and rec­ommend appropriate KM solutions and actions. Before proceeding with mapping knowledge flows, therefore, I present a tool for the analysis of the knowledge audit results.

Step 2: Analyzing Audit Findings. To judge whether you know or not cannot be expressed in a black or white manner (have and have not), as there are many levels of knowledge or ignorance, many shades of gray. Further, even when various levels of knowledge are identified, the auditor needs a benchmark (market standard, state-of-the-art, or competitions) to base his or her judg­ment about the state of the organization's knowledge resources. An assessment of the levels of knowledge should equip management to assess the level of investment required to fill the identi­fied gaps. This is why the CICM model distinguishes between the types of knowledge gaps by reference to the Levels of Abundance or Deficiency (LAD) of a certain resource. Gaps are iden­tified as those deficiencies in knowledge resources that may affect the organization's competitive performance adversely or limit its growth potential. Some gaps may demand extensive invest­ment to be filled, and it may be therefore more prudent not to fill it. The LAD classification pro­vides guidance as to the solutions that can be employed to deal with the various levels of abundance and deficiency. These should be mapped for the whole organization and for every business unit or department to show LAD by reference to organizational competencies and those of the various departments and business units. The various levels are represented in colors so that they can be used to produce topographic or graphic maps through visualization software pro­grams to give management a snapshot of the state of their knowledge resources at a specific point in time.

The LAD includes the following four levels:

1.      Green level. No deficiency. Have abundant knowledge resources that are related to core competencies or strategic knowledge areas (i.e., areas of knowledge that are necessary for meeting the strategic goals). The main question here is to find whether these resources are being disseminated across the organization to those that need them. That is where codification of the knowledge and the development of best practices are the best options. The design of the knowledge base, building knowledge content, and updat­ing the base can be addressed here.

2.      Blue level. Deficient tacit knowledge but abundant explicit knowledge resources, where the databases and manuals are available, but gaps in tacit knowledge resources detected where there is no expertise in the required area. These gaps should be addressed by the organization's recruitment plan, and training with a focus on development of the required competencies. This strategy is used by Microsoft, who, to build new compe­tencies, assigns new employees to design complex new software systems in teams of three to seven, under the guidance of mentors, moving them up the steepest learning curve in the shortest time possible.1 Alternatively, communities of practice (CoPs) can be formed around the blue-level areas of knowledge to fill the identified gaps.

3.      Orange level. Limited deficiencies identified in the knowledge resources of a certain department but the gap can be filled from resources within the organization. This is where blocks in the knowledge flow are detected since such blocks are the main reason the knowledge is not being transferred to those who need it. The use of communities of practice is essential here in transferring the knowledge to those who need it, maintain­ing a knowledge content center, and creating new knowledge in the area.

4. Red level. High deficiencies identified in the explicit and tacit knowledge resources required to meet strategic goals or to effectively compete in a certain area of knowledge. Such gaps can be probably filled from external resources for a cost within budget. Under this, top management needs to consider whether a strategic alliance with a part­ner who has knowledge in the targeted area is possible. In cases in which such an alliance is not feasible and acquisition of knowledge requires extensive expenditure, top management should consider divestiture, if the area of knowledge is not critical to the organization's growth plans. In other cases, the follower strategy mentioned by Daniele in Chapter 5 is useful. Reverse engineering and closely monitoring how the most suc­cessful competitors utilize their resources can provide valuable insight and access to explicit knowledge resources. These resources are available from public free sources (e.g., USPTO patents for technologies, Internet, trade shows); and private sources (e.g. research companies, independent R&D labs, and consultants). That, however, would not be sufficient and management would still need to find ways to develop tacit knowledge in that area.

Looking at the results of the knowledge audit this way enables the auditor to accurately assess the knowledge needs of the organization and which approach will be the most appropriate to address the identified needs. In addition, the level of urgency in filling each of the identified gaps should be assessed to prioritize gap filling. For this to be done the auditor needs to have access to the tar­geted competitive position of the organization and its business strategy. Cost and time estima­tions for filling the gaps should also be made. This will better equip top management to plan and unfold the implementation of the knowledge strategies they adopt to fill the identified knowledge gaps within their budgets. It should be noted that knowledge needs are in a state of constant flux. Therefore the organization should periodically assess its knowledge needs to determine whether it has the required knowledge resources to meet certain strategic goals or operationalize a certain competitive strategy.

The stocktaking exercise should also refer to the knowledge needs for carrying on critical business processes. The end goal of KM is to support the knowledge needs of critical business processes to enable effective organizational action. This is done by mapping the knowledge resources in a way that reveals how they are being used to support the key actions and tasks of critical business processes. While the stocktaking exercise shows the availability of knowledge resources, the mapping exercise explained next shows how they are utilized, and the effectiveness of such utilization.

Step 3: Mapping Knowledge Resources. A knowledge resource map depicts the "as-is" of par­ticular knowledge resources accessed to perform identified tasks in the core business processes. This map reveals how and which knowledge resources are used to support the business process under audit. Mapping knowledge resources also uncovers inefficiencies where critical actions are not supported electronically, and redundancies where such actions are supported by multiple overlapping resources. It also reveals the type of resources that support each of the key actions, (i.e., whether electronic databases, documents, or personnel). By mapping the critical business processes, the knowledge resource map provides important guidance for the design of the knowl­edge base and IT systems as to which knowledge resources should be grouped in electronic con­tent centers, and which should instead be referred to expert directories and nonelectronic sources. As shown in Exhibit 11.2, the various actions A-E of a business process are examined to find the type and location of knowledge resources needed to perform the process. For example, action or activity D is supported by database 3 and reports 4, both explicit resources, while process C is supported by resource 2 only. Understanding the relationship among the various resources and actions enables a better assessment of the knowledge creation processes, its strengths and weak­nesses. Some knowledge resource maps also refer to external knowledge resources, where exter­nal knowledge resources are tapped for intelligence and other purposes.

A-                B-C-D-         E

In performing steps 2 and 3 of stocktaking and mapping knowledge resources, it is important to keep in mind the transient nature of knowledge as a resource. Knowledge is ever changing and ever growing with new technological advances and changing market trends. To remain current and useful, knowledge resources have to be kept in a constant state of flux - hence, knowledge flows are at least as important as knowledge stocks for knowledge creation. Knowledge flows represent the various exchanges that develop over time among people inside and outside the organization, independent of organizational charts, for the sole purpose of getting the job done.

To complete the audit exercise, it is therefore important to map knowledge flows and exchanges in order to detect concentrations of personal knowledge, indicated by a majority of people denot­ing certain members as experts in a certain area of knowledge, and to detect blocks in knowledge flows where there is less activity or flows between departments or units; hence step 4.

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