Risky Business: Risk as a Business Case for Knowledge Management

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<p>PowerPoint Presentation</p> <p>RISKY BUSINESS: WHEN BAD THINGS HAPPENRisk as a business case for KMCARLA SAPSFORD NEWMAN</p> <p>SUMMARY OF PRESENTATIONDont let a crisis go to waste!Rahm Emanuel, former Obama chief of staff</p> <p>Hypothesis:</p> <p>KM is not intuitively seen by business leaders as a risk mitigation tool or process. But it is.</p> <p>I will demonstrate how you can make the business case, assign value to risk (or its mitigation) and identify the appropriate KM tools to address your organisations risk.</p> <p>THE MILITARY DEBRIEF: THE U.S. ARMY AS KM INNOVATORSBusiness is a battlefield. The Army would knowThe U.S. Army was one of the first innovators of KM. Why?They understood something we forget: if you dont learn from your mistakes, you die.</p> <p>KM &amp; RISK MANAGEMENT:The BasicsIdentify the core risks to your organisation</p> <p>Identify the KM tools to address those risks: After-Action Reviews/Lessons Learned, Competitor Intelligence, Accident Investigations, Risk Mapping</p> <p>Assign a value to the costs/savings &amp; make the business case for KM</p> <p>Find pilot communities willing to try out KM processes. Create case studies of success.</p> <p>Integrate KM into overall risk mitigation and business strategies</p> <p>1</p> <p>2</p> <p>3</p> <p>4</p> <p>5</p> <p>In turbulent business and geopolitical times, risk is increasingTacit knowledge of what goes wrong can make or break a businessNot Know-How, but Know-Why</p> <p>4</p> <p>CASE STUDY: CONSULTANTS LIVE OR DIE BY LEARNING FROM THE MISTAKES OF OTHERSKM @ McKinseySpend 10% of annual revenues on KMEveryone MUST write a lessons learnt report following each projectReport are in ppt format, anonymisedand enjoy a high reuse rateExperts determine metadata including shelf lifeHigh value reports are considered knowledge objects and finalised by professional editorShared via a bespoke intranetStart of each new project: 50% of time spent on prior project research and 50% calling other people in their networksPersonal details are kept up to date, key for next assignmentStaff appraisals: 20% of final score linked to KM</p> <p>RISK EXAMPLE #1: RETIREMENTS AND STAFF CHURNExperienced professionals are fast retiring.</p> <p>How many:employees in your company retire every year?employees transfer jobs or jump ship?new employees join?</p> <p>For every one of these shifts in your talent pool, you have a potential risk.</p> <p>HOW MANY OF YOU HAVE...a handover or transition plan in your organisation? a risk mitigation plan? a scenario plan for potential gamechangers or market disruptors? </p> <p>7</p> <p>RISK EXAMPLE #2: SCENARIO PLANNINGDEMOGRAPHICS ARE DESTINYEvery day, our global population increases by more than 220,000 people. That is the equivalent of the entire population of Hong Kong ~7.4 million every 34 days</p> <p>Demographics:HK aged between 50-65 = 25%Retired or deceased in 10-15 years</p> <p>The future is neither completely predictable nor completely random. </p> <p>Scenarios give us the tools to anticipate what might happen and allow us to understand our options.</p> <p>(Example from a public sector investment agency and an energy company scenario team.)</p> <p>8</p> <p>RISK EXAMPLE #3: COMPETITOR INTELLIGENCENeed to access the tacit knowledge of new hires within six months.Someone has to connect the dots back to the core business. Example from the private sector</p> <p>RISK EXAMPLE #4: AFTER ACTION REVIEWS OR ACCIDENT INVESTIGATIONSKNOWLEDGE IS EXPENSIVE TO RE-INVENTExample from a Singaporean manufacturing company. </p> <p>Fail faster!</p> <p>FAILURE IS GOODto learn fromFailure is just as important to discuss and share as success. Yet it is often the one area that companies wish to avoid.</p> <p>Culturally, failure is seen as negative. If your company really wishes to be a learning organisation, it needs to embrace failure as much as success.</p> <p>Businesses are made of people, processes and tools. Guess which one of these has the most risk and volatility?</p> <p>Failure will be repeated unless acknowledged and learned from.</p> <p>Can your business afford repeat failures?</p> <p>RISK EXAMPLE #5: RISK MAPPING /PROJECT-FOCUSED KM TARGETSProject-specific KM examples might include the following risk matrix mapping:</p> <p>Help identify potential risk factors and unmanaged assumptions in professional services engagements Identify conflicting expectations, including scope changesFrame operational issues, including data integration and communication within project teamsFocus on financial issues including budgetingIdentifying the capacity of the customer and the vendor/service providers to mitigate risk and develop risk plansExamples from a construction project</p> <p>IN CONCLUSION, ASSIGN VALUE TO KMIDEAL RATIO IS ABOUT 10:1Building the business case for KM: tie it into your companys overall strategy.</p> <p>If you can prove potential benefits of $1 million, for example, then your organisation can afford to spend at least $100K on risk mitiation. </p> <p>Find departments/communities willing to take on a KM pilot risk mitigation project.</p> <p>KM can pay for itself, but you need to find credible ways to prove value.</p> <p>GOOD LUCK!</p> <p>QUESTIONS?</p> <p>THANK YOU!CARLA SAPSFORD NEWMANcarla@strategicknowledge.org</p>