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When I studied Finance in college the course should have been called Time
Value of Money. Finance, as anyone who has ever taken out a mortgage
knows, is really the calculation of the value of cash over time. Net
Present Value, for example, calculates the present value of future payments by
discounting them by the rate of inflation. If, for example, we have a choice
between a lump sum of $2500 today or 3 payments of $1000 starting next year and
proceeding for the next three years, which is best? Net Present Value is a
means of calculating the present value of the 3 future payments by discounting
for inflation, and likewise it calculates the future value of the lump sum by
adjusting for rate of return - assuming you invest and not spend the money
So what does all of this have to do with knowledge
and a company's ability to manage and preserve its collective,
aggregated knowledge in some useful way? I think we can apply the same
rules to knowledge that all of us have agreed to apply to money (all of us who
use credit cards, have mortgages, and invest in stocks and bonds, that
is).
Knowledge is an asset, just as cash is. We accumulate knowledge and
over time it begins to earn interest. We can for example apply today's knowledge
to tomorrow's solution. Knowledge builds upon itself, and it has a real rate of
return. Likewise, knowledge that is not invested, just sits there, is going to
be eaten up by inflation. Take the typical email inbox of your best sales person
or engineer. All of the knowledge that sits in that inbox, never
re-invested for the company, eventually loses value as the inbox size inflates.
Solutions and insights from yesterday are eventually buried under a pile of
subsequent work.
On the other hand, knowledge that's reinvested has the potential of
achieving a real rate of return. Solutions, answered questions, insights
can all be used over again. They eventually form a library of knowledge owned by
the company. And this knowledge library becomes the arena of collaboration, a
place where sales, engineering, customer service, operations can visit and
revisit to solve problems and gain new insight into customer behavior.
I know that many companies have teams of people who look outward and gather
everything from information snippets to books, magazines and manuals about the
business areas in which the company operates. The purpose is to keep management
aware of changing markets and changing market offerings of competitors. Don't be
caught unawares! But how few companies make an effort to gather the knowledge
within their own companies, the knowledge they generate daily. The
assumption is that people have the knowledge, are going to be with the company
indefinitely, and will share it with others when need arises. Poor
assumption. Of course, gathering is just the first step. Managing internal
knowledge and putting it to use is a another question, for another day. |
