Knowledge Management (Part 1)

Here in South Carolina, it’s back to school time. All the teaching and learning that’s about to go on in the school inspired me to think about how to develop a teaching and learning law department. As such, I thought I’d make the next few posts about a related subject: knowledge management and its application to lawyers.

First off, what is Knowledge Management?

Imagine waking up one day and having to re-learn how you commute to work, where you left your car keys, and even how to drive. Now imagine having to relive that experience day after day after day. You may think such a scenario is merely fodder for movies or old episodes of the “Twilight Zone, and yet countless corporations are living with this situation as precious institutional memory is routinely discarded, forgotten, misfiled, and otherwise lost.

It’s easy to lump KM initiatives as another management fad of the month. Such a characterization would be wrong. Managing knowledge is fundamental for business success and confers a competitive advantage on those organizations that do it best. This is especially true for corporate lawyers, whose stock in trade is knowledge, wisdom and judgment.

An effective KM program involves many complex organizational issues; merely building elaborate technology tools is not sufficient; instead knowledge sharing must be woven into the daily habits of the corporation. In fact, KM literature suggests that as much as 80% of knowledge sharing is done through social networks.

Origins of KM Theory

While the aggregation, cataloging and distribution of knowledge dates back to time immemorial, “Knowledge Management” as a business discipline was founded by Karl-Erik Sveiby. Sveiby, an accountant by trade, was troubled that traditional balance sheets did not adequately take into account the vast amount of intangible assets, such as knowledge and business contacts, that were integral to business success. In 1986, Sveiby co-authored The Invisible Balance Sheet a book that popularized the idea of KM. As developed nations evolved from manufacturing-based to services-based economies, the focus on intangible assets accelerated.

Sveiby developed a three-part framework for assessing intangible assets; Employee Competence, Internal Structure and External Structure. Employee Competence is defined as the capabilities and skills of the people in an organization. Internal Structure is the patents, processes, information flows, vision, strategy, policies and communication habits of a company. External Structure is the value of the relationships with those entities with whom you do business.

On the next post, I’ll continue this discussion of KM theory.