RISKY BUSINESS: WHEN BAD THINGS HAPPENRisk as a business case for KM

CARLA SAPSFORD NEWMAN

SUMMARY OF PRESENTATION‘Don’t let a crisis go to waste!’Rahm Emanuel, former Obama chief of staff

Hypothesis:

KM is not intuitively seen by business leaders as a risk mitigation tool or process. But it is.

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 organisation’s risk.

THE MILITARY DEBRIEF: THE U.S. ARMY AS KM INNOVATORS

Business is a battlefield. The Army would know…

The U.S. Army was one of the first innovators of KM. Why?They understood something we forget: if you don’t learn from your mistakes, you die.

KM & RISK MANAGEMENT:The Basics

Identify the core risks to your organisation

Identify the KM tools to address those risks: After-Action Reviews/Lessons Learned, Competitor Intelligence, Accident Investigations, Risk Mapping

Assign a value to the costs/savings & make the business case for KM

Find pilot communities willing to try out KM processes. Create case studies of success.

Integrate KM into overall risk mitigation and business strategies

1

2

3

4

5

CASE STUDY: CONSULTANTS LIVE OR DIE BY LEARNING FROM THE MISTAKES OF OTHERSKM @ McKinsey

• Spend 10% of annual revenues on KM• Everyone MUST write a lessons learnt report following each project• Report are in ppt format, ‘anonymised’and enjoy a high reuse rate• Experts determine metadata including shelf life• High value reports are considered ‘knowledge objects’ and finalised by

professional editor• Shared via a bespoke intranet• Start of each new project: 50% of time spent on prior project research

and 50% calling other people in their networks• Personal details are kept up to date, key for next assignment• Staff appraisals: 20% of final score linked to KM

RISK EXAMPLE #1: RETIREMENTS AND STAFF CHURN

Experienced professionals are fast retiring.

How many:• employees in your company retire every

year?• employees transfer jobs or jump ship?• new employees join?

For every one of these shifts in your talent pool, you have a potential risk.

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?

RISK EXAMPLE #2: SCENARIO PLANNINGDEMOGRAPHICS ARE DESTINY…

• Every 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

• Demographics:HK aged between 50-65 = 25%Retired or deceased in 10-15 years

• The future is neither completely predictable nor completely random.

• Scenarios give us the tools to anticipate what might happen and allow us to understand our options.

• (Example from a public sector investment agency and an energy company scenario team.)

RISK EXAMPLE #3: COMPETITOR INTELLIGENCE

Need 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…

RISK EXAMPLE #4: AFTER ACTION REVIEWS OR ACCIDENT INVESTIGATIONSKNOWLEDGE IS EXPENSIVE TO RE-INVENT

Example from a Singaporean manufacturing company.

Fail faster!

FAILURE IS GOOD……to learn from

• Failure is just as important to discuss and share as success. Yet it is often the one area that companies wish to avoid.

• 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.

• Businesses are made of people, processes and tools. Guess which one of these has the most risk and volatility?

• Failure will be repeated unless acknowledged and learned from.

• Can your business afford repeat failures?

RISK EXAMPLE #5: RISK MAPPING /PROJECT-FOCUSED KM TARGETS

• Project-specific KM examples might include the following risk matrix mapping:

• Help identify potential risk factors and unmanaged assumptions in professional services engagements

• Identify conflicting expectations, including scope changes

• Frame operational issues, including data integration and communication within project teams

• Focus on financial issues including budgeting• Identifying the capacity of the customer and the

vendor/service providers to mitigate risk and develop risk plans

• Examples from a construction project

IN CONCLUSION, ASSIGN VALUE TO KMIDEAL RATIO IS ABOUT 10:1

Building the business case for KM: tie it into your company’s overall strategy.

If you can prove potential benefits of $1 million, for example, then your organisation can afford to spend at least $100K on risk mitiation.

Find departments/communities willing to take on a KM pilot risk mitigation project.

KM can pay for itself, but you need to find credible ways to prove value.

GOOD LUCK!

QUESTIONS?

THANK YOU!

CARLA SAPSFORD NEWMANcarla@strategicknowledge.org