Managing Knowledge and Managing Processes

Matthew Morgan, COO, Savills Inc. (North American business unit of Savills plc)

In this article, I will share some personal experience that I imagine is common to many readers who have worked in organizations in the private, non-profit, and government sectors. Often, processes are immature and undefined, not performed consistently (or worse, processes are not performed at all), and organizations rely too often and too much on the heroics of individuals to accomplish their goals. This is why the deliberate management of process has evolved into a discipline that is increasingly necessary for any organization at scale. Readers may be familiar with manifestation of this formal discipline in recognizing terms such as “BPM” (Business Process Management), “Six Sigma” (a methodology to create statistical process control within six standard deviations), or “business architecture” (the practice of modeling an enterprise’s structure and the relationships of components to each other).

Building and maintaining business capability (i.e., the ability of a business to deliver its desired outcomes) is the essence of operations management. A business capability is the result of the interactions of people, processes, and technologies to deliver desired business outcomes. This article emerged after reflecting on the first step to build business capability across many different organizations in many different industries at many different maturity levels. I have come to appreciate that knowledge management is that first step.

If there are no clearly documented policies in an organization to guide behaviors and decision-making, the people (the first element of a business capability) will not be aligned or have a shared understanding of goals and expectations. There will be frequent and needless expenditures of effort to debate boundaries of actions and the reasoning behind them. If there are no documented procedures, departure or absence of key people will be relatively more costly, as their precious knowledge is not available to the organization. Onboarding is also difficult as new hires will need to go on a “scavenger hunt” to find the information they need to do their jobs.

Lack of documented procedures also creates inconsistency and inefficiency in an organization’s processes (the second element of a business capability). Without common reference points, people in different parts of the organization will invent or reinvent processes or do their best to look to past practice, which may often not be the most efficient or effective way to execute a process. Even for those organizations where procedures are documented, poor knowledge management can result in procedures being inaccurate, in that they either do not describe the desired process or become outdated and therefore do not describe the current state of practice; confusing, in that they are poorly written or hard to follow; or inaccessible, in that they are hard to find. Ensuring procedures are easy to understand, accurate and up-to-date, and accompanied by appropriate training are additional components of effective knowledge management.

Lack of documented procedures also creates inconsistency and inefficiency in an organization’s processes (the second element of a business capability)

Last, the third element of a business capability, technology, suffers if an organization poorly manages knowledge. Software applications are designed to implement an organization’s business processes and business rules, and failure to capture those processes and rules in well-articulated, detailed, and accurate business requirements will lead to failure in software implementation. Systems that are designed and implemented without being well-informed by requirements will not meet the needs of the business, and will most likely suffer from low user-adoption or costly re-design, or both. The costs to an organization’s technology management perhaps become the most obvious consequence of poor knowledge management among the impacts on people, process, and technology.

I have also often heard, as an objection to implementation plans to better manage knowledge and to develop or improve reference documents, that documentation is a wasted effort if business process change is underway. Why document the current state if it will quickly be overcome by the future state? I would suggest a variety of reasons for this. First, during the interim period before the “future state” is achieved, the organization and the people in it will continue to suffer from the problems of an absence of knowledge management, so there is value even in an interim period to manage an organization’s knowledge. Second, the creation of reference materials – the policies, procedures, and business rules that constitute a business’s “organizational process assets” – is itself a valuable effort and will be anchored more in the certainty of the current state than the uncertainty of a future state. The next step of evolving those documents as processes change can thus be a more evolutionary change. Last, the current state will, much more often than not, inform the future state. The process of managing knowledge through the creation of reference documents is itself a form of business analysis that will often uncover missed details that would be important in the design of a future state. It could also establish a baseline that allows organizations to measure improvements and optimize the future state.

Much of my career has been in the professional services, which rely on the expertise of highly-trained and experienced professionals. These expertise-based knowledge workers rely on information to do their work. The management of information and knowledge is critical to our success in professional services. Beyond the people-centric skilled services sectors, more than ever, the evolution of technologies across industries has made information and data critical to the success of organizations. A helpful approach I have found is in the series of international standards known as ISO 9000. ISO 9000 manages quality of products and services through the management and control of documents, essentially requiring that organizations document what they do, and do what they document. Knowledge management is the foundational capability to allow organizations to perform in the information age.

Many readers may find obvious the essential and foundational nature of knowledge management to enable process management. However, I have worked in operational management and operational improvement in a sufficient number of organizations over the past 20 years to realize that this is too often an under-appreciated discipline. Many organizations do not develop documents or keep those that exist up-to-date or accurate. People in the organization do not read them, cannot find or access them easily, or do not receive training in them. Last, when I have seen this done well, it is often done by overcoming an incredible amount of both passive and active resistance by stakeholders who fail to visualize the benefits and appropriately prioritize this important work. After reflection on these experiences, I hope this article can help others appreciate the importance of managing knowledge to building business capability, in all three of its dimensions of people, process, and technology.

Prior to joining Savills, Matt held various roles at Bridgewater Associates, Parsons Brinckerhoff, Starwood Hotels, McKinsey & Company, and the U.S. Army. Matt is a prolific author, having written nine books and many articles, including at PEX Network, BPTrends, and a book chapter in Paul Harmon and Roger Tregear’s Questioning BPM.

Thank you to Roger Tregear of Tregear BPM (https://www.tregearbpm.com/), Joanne Dong of JD Stream Management Consulting (http://www.jdstream.ca/), and Sandeep Johal of PwC Australia for reviewing an early draft of this article and providing insightful feedback.

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