Knowledge Audit: An Effective KM Tool

In today’s knowledge-driven era, K-Audit is an imperative tool to enhance effective knowledge management.

“By completing the knowledge audit, the auditors can determine the organization’s ability in keeping abreast of relevant information, and have an awareness of where to go for expertise in a specific area.”

– Karl Wiig, Author, People-Focused Knowledge Management.

In today’s knowledge-driven economy, organizations are increasingly dealing with intangible assets and intellectual properties like human capital, customer capital, patents and brands. Accounting these issues has become a daunting task for organizations and must be properly included in the corporate financial accounts. Unlike in the past, these intangibles are now contributing maximum to a firm’s bottom line. Innovation and knowledge have become the key imperatives from automobiles to aircraft, from mobile phones to office equipment and computers to sports equipment. Accordingly, these intangible, knowledge assets are dominating the corporate balance sheets and revealing their value of knowledge by demonstrating how it is, or how it can be converted into purchasable goods and services. Against this backdrop, knowledge is recognized as the most important strategic asset in any organization across the globe.

However, in many organizations knowledge is invisibly created, captured, distributed and shared throughout the organization. And most importantly, intangible assets are not easy to quantify, measure and value. Organizations are universally acknowledging the difficulties they encountered in attempting to quantify and measure these intangibles. These developments offer a strong case for Knowledge Audit or K-Audit. It is the first major stage in effective knowledge management and corporate knowledge valuation. Moreover, with the help of knowledge audit, organizational knowledge can be quantified, measured and assessed.

K-Audit focuses on the core information and knowledge needs in an organization by identifying the gaps, duplications, flows and their contribution to business goals. With sound investigation, it provides an organization knowledge health. In short, it provides an evidence-based assessment of where the organization is required to focus on in its Knowledge Management (KM) efforts. K-Audit may refer to identifying specific knowledge assets such as patents and the degree to which these assets are based, enforced and safeguarded. Dr. Ann Hylton, a leading knowledge auditor defines, “The KAudit is a systematic and scientific examination and evaluation of the explicit and tacit knowledge resources in the company. It investigates and analyses the current knowledge-environment and culminates, in a diagnostic and prognostic report on the current corporate ‘knowledge health’. The report provides evidence as to whether corporate knowledge value potential is being maximized. In this respect, the K-Audit measures the risk and opportunities faced by the organization with respect to corporate knowledge.” By using K-Audit tool, any organization can reveal its KM needs, strengths, weakness, opportunities, threats and risks.

The need of K-Audit

Organization’s experience with KM initiatives reveals they fail dismally as with only at best 15% success rate. The unsuccessful KM initiatives over the past decade have caught the attention of KM

professionals and business analysts and have been the focus of their discussion. Industry analysts estimated that Fortune 500 companies alone would have lost $31.5 bn as a result of failed KM initiatives in the recent past. Then KM experts started questioning what has gone wrong, and will continue to go wrong? Why are KM initiatives failing? Thomas A Stewart, a KM Guru pointed out that “Companies waste billions on KM because they fail to figure out what knowledge they need, or how to manage it.  It takes little imagination to work out that a knowledge audit would provide researched evidence to help companies or organizations ‘figure out what knowledge they need, and how to manage it’.”

Experts say that the failure to incorporate the K-Audit in each and every KM initiative-program is the single most important reason for poor KM outcomes. K-Audit provides the structural overview of an organization’s knowledge in a target area. It gives a qualitative and quantitative view of the individual chunks of knowledge stored in repositories, which could be databases, paper-based or individuals’

experts.

Information audit vs. K-Audit

In the corporate world, auditing is an accepted management technique. Currently, there are different types of audits exist such as financial audits, communication audits, technical audits, employment audits, and also more recently, information audits along with K-Audit. Information audit focuses on the identification of users’ information needs as well as how well these needs are met by the information services. While both information audit and K-Audit focuses on documented knowledge. More importantly, K-Audit focuses on non-documented (tacit) knowledge which people carry along with them.

Unlike the information audit, the required information for K-Audit cannot be found in the corporate system and is totally depend on people. Information knowledge can be found within the corporate systems whereas a knowledge audit has a wider scope to include both corporate documents and people-based knowledge. For the effective utilization of expertise in the organizations, K-Audit identifies where it can find the expertise and how this expertise is accessed.

Leveraging customer knowledge through K-Audit

In today’s knowledge-based economy, knowledge is the most important asset that companies and organizations own. For any organization, core knowledge assets include employees, partners, suppliers, customers and competitors. However, customer knowledge is equally important in any of these core knowledge assets. In fact, customer knowledge is more vital to business success than ever before. To build and sustain their competitive advantage, organizations are focusing more and more on customer knowledge.

To get maximum inputs from customer knowledge, an organization must get to know and understand its existing customers and learn about its potential ones. If it does not know its customers

12 Key ways in which a knowledge audit helps CRM

These 12 points serve only to give a brief indication of the direct benefits that will result from a carefully  planned and well-conducted knowledge audit.

To discover and know:

1. Critical knowledge about its customers.

2. Existing and untapped customer knowledge sources.

3. Who really has what knowledge about customers.

4. How well customer knowledge is processed, used and shared.

5. How customer knowledge flows inside and outside the company.

6. Customer knowledge gaps, bottlenecks and barriers.

7. The value of different types of customer knowledge.

8. What customers expect from the company.

9. Where the company has failed to meet customer needs/expectations.

10. Main or real reasons customers shift to competitors.

11. How efficiently customer feedback and complaints are acted on.

12. The value of customers’ suggestions and feedback.

Source: CRM Today

well, it cannot put their valuable knowledge to best use. Dr. Ann Hylton suggests, “Integral and intrinsically aligned to customer knowledge awareness is employee knowledge. Employees throughout the company, in different roles and with varying interests, have a wealth of knowledge about customers, their preferences, their attitudes, behaviors, moods and most of all, what is likely to make them shift their loyalties to a competitor.” However, there is nothing like asking the customer directly. But employees’ knowledge about customers’ understanding and appreciation will take the company to new heights. According to KM experts, once organizations capture and harness such employees’ knowledge, it will indeed help the company to know the best way to reach out to its customers.

Dr. Ann Hylton opines, “One sure way to truly begin good customer knowledge management is by auditing customer knowledge, directly (from the customers) and indirectly, via the knowledgeable employees, and indeed suppliers and partners. This is achieved through the K-Audit, which is a scientific investigation, analysis and review of corporate knowledge assets, internal (employee knowledge) and external (customers, suppliers, partners knowledge).”

In the age of information world, K-Audit is becoming day-by-day a popular tool among management consultant to check the health status of knowledge assets and their utilization in the organization.

There is no doubt that K-Audit is unquestionably the first step in any kind of KM initiative and has been considerably recognized as a must for any kind of organizational efforts towards effective knowledge management.

N Janardhan Rao, Senior Economist.