RFG believes many companies engaging in knowledge management (KM) initiatives are missing a critical step during the KM planning phase the knowledge assessment or audit. Cross-industry studies show that up to 85 percent of all KM initiatives fail to achieve their business objectives. IT executives should lead this initiative, and in concert with affected staff conduct an up-front assessment to build a solid foundation for aligning KM processes and strategies with business objectives.Business Imperatives: A knowledge audit highlights process inefficiencies and performance impacts. IT executives should conduct knowledge audits to identify and measure knowledge flow, gaps, and source credibility. The information will help IT executives develop a strategic KM initiative, or redesign current knowledge practices to be more effective. KM extends beyond IT, and therefore all affected users should be involved in the KM planning process. Failure to include the business perspective or involve relevant staff will result in an implementation that focuses on technology, and does not deliver business value to users or the organization. IT and line of business (LOB) executives should develop a plan to gain active participation from users to ensure knowledge is current and therefore valuable. In addition, IT executives should seek senior management endorsement and enforcement of the planning process, to keep the effort on track, and to minimize pushback from LOB managers. Knowledge should be assessed to determine its current and potential business value, and IT and LOB executives should identify strategic opportunities to use this knowledge to drive new business initiatives. Knowledge should be carefully created, compiled, organized, transformed, transferred, pooled, applied, safeguarded, and managed. IT executives should collaborate with LOBs to analyze knowledge for leveragability and weaknesses by incorporating existing and frequently used information to create valuable knowledge. Conducting yearly knowledge audits is necessary to keep knowledge valuable. Knowledge must be properly managed to assist evolving companies in getting the most value out of employees, operations, and processes. A goal of the KM process is to remove the dependency on individual people for knowledge, and enable any employee to retrieve and use any available knowledge in the organization through collaborative means. Moreover, properly managed knowledge provides the business with a better understanding of business performance, and presents opportunities to identify valuable business leads. Thus, the effects of elastic knowledge management will help the enterprise staff and processes adapt easily with an ever-changing business and organizational environment. However, the time and effort required to complete a proper knowledge audit and maintain momentum should not be under-estimated. Rapid and proven success is necessary to gain interest and support of the audit effort. IT and LOB executives should collaborate to identify a business unit that will benefit most from KM, define audit goals and depth, conduct an audit (as described below) for that organization, and quickly turn around the positive results.A knowledge audit assesses how effectively the organization captures, manages, and transfers knowledge to support key business processes and objectives. Prior to conducting the knowledge audit, IT executives should review current knowledge activities and KM capabilities (if any).Conducting a Knowledge AuditThere are many ways to conduct a knowledge audit. These methods range in varying degrees of coverage and depth of detail. Some knowledge audit methodologies include ethnographic studies (field observations), knowledge inventorying, measure-based approaches, and self-assessment techniques. After performing the above-mentioned pre-audit steps, a minimal audit should include stages to identify knowledge needs, conduct knowledge inventory, assess knowledge value, and analyze knowledge flow. Needs Analysis The creation of critical business processes requires input and cooperation from impacted departments to support key tasks and activities and drive success. As such, IT executives must include LOBs and their respective staffs throughout the KM effort. LOB managers must remain involved to ensure that staff knowledge and job functions are aligned with departmental goals. Senior management must also remain involved to keep all departmental goals aligned with corporate objectives. IT executives should seek participation from staff and subject matter experts (SMEs) that are disciplined in the daily process. They can discern what knowledge is needed, and understand the different requirements to perform their jobs well. The result of this knowledge gathering process should easily transition to the next phase of the knowledge audit process knowledge inventory.Knowledge Inventory\/Analysis of Knowledge This process entails corporate knowledge be identified and located, then recorded and categorized. IT executives should seek assistance from staff and SMEs to identify knowledge assets, locate where knowledge is stored, and pinpoint the owner of that knowledge. Staff and SMEs should also be involved to measure and assess the value of collected knowledge.Popular approaches to gain insight and tacit knowledge from staff and SMEs include group discussions, one-on-one interviews, and surveys. IT executives should utilize several of these approaches to get past any mind blocks that may exist during the time of evaluation. Staff and SMEs will be able to direct IT executives to valuable knowledge resources, identify current inefficiencies, and provide insight into other valuable knowledge that may not exist to further support job responsibilities. IT executives should begin discussions with SMEs and longer-employed staff, as they hold more knowledge than junior-level and new employees.Knowledge maps, while an independent effort, are useful tools to provide visual representations of the measurements and levels of connectedness and inter-connectedness within the organization. A knowledge map depicts inventory locations of documented information and external resources, such as libraries, subscription services, and Web sites. Moreover, knowledge maps encourage reuse, and prevent reinvention and rework of existing knowledge.All knowledge driving processes or process results can be mapped. Organizational knowledge maps can be structured in several ways, such as an overlay of the business units, functional and project teams, geographic location, and organization chart. As a first step, IT executives should seek insight from HR, as some of the documents may already be readily available. In addition, IT and LOB executives should collaborate, define, and determine what maps to create. Analysis of Knowledge Workflow People, process, and technology are evaluated in this phase. Knowledge management and sharing is highly cultural. Employee attitudes towards habits and behaviors concerning participation in knowledge sharing should be monitored and assessed to help develop an adequate strategy to drive user involvement. From a technology perspective, IT executives should review incumbent systems that facilitate knowledge flows, and help to connect people with needed information. Throughout the audit process, strong communication is key to address issues or concerns that may arise, keep participants involved, and minimize pushback when making final recommendations.Assessing and Maintaining the Value of KnowledgeFrom a senior management perspective, knowledge is valuable if it improves processes, positively impacts the company's bottom line, and\/or reduces costs. Knowledge resources should be assessed, monitored, and ranked by value. Simply put, resources that are accessed and used more frequently become more valuable. Examples of knowledge value opportunities include but are by no means limited to the following. Change management To increase adaptability, flexibility, and responsiveness in a constantly changing and evolving business environment. Customer knowledge To collect customer knowledge to build and provide world-class customer service, or to customize and effectively market current and new products and services. For instance, in a call center scenario, the value of knowledge can be measured through customer feedback, interaction, retention rates, and surveys. Innovation\/learning To expand knowledge and improve skills to rapidly generate, produce, and market new and innovative products and services. Intellectual property (IP) Increasing and managing a portfolio of codified and\/or patented knowledge that contributes to the financial value of the enterprise. Knowledge-based products To generate additional knowledge value to deliver more "intelligent" products and establish uniqueness. Process and product quality knowledge to share best practices to increase product quality and enhance process and performance. Each practice listed above involves different KM practices and measures of progress. IT and LOB executives should evaluate current business processes to determine which management practices align and best support corporate strategies and objectives. To maintain momentum and alignment, IT and LOB executives should also reevaluate core business processes and knowledge at least once every year.Common Pitfalls to AvoidA KM initiative is a large undertaking that can lead to failure if not planned and managed properly. IT executives should avoid common pitfalls by preparing and performing initial research before project launch. Some examples are listed below. Buy-in to vendor hype Industry vendors often produce new, trendy names to address existing issues. For example, "information management" and "knowledge management" are often used interchangeably to drive product sales. However, each term addresses different objectives. Information can be collected and maintained accurately, but needs further manipulation and analysis to turn the information into knowledge. Collecting explicit knowledge Cross-industry reports state that almost 75 percent of corporate knowledge is tacit knowledge. Tacit knowledge is known to exist, but is not as easily quantified or shared as explicit knowledge. For example, explicit knowledge is stored customer information that would include the customer's account information, while tacit knowledge is required to interpret the customer's request adequately. Tacit knowledge changes constantly, and in this situation, the customer representative transformed information to knowledge. Failure to assess current environment Often, similar initiatives are already being worked on elsewhere in the organization. In these situations, IT executives must ensure alignment of the disparate projects, and create a solid team to drive the project forward. Moreover, current environments are often unprepared to take on new initiatives. IT executives must therefore ensure that employees are ready to support the effort. Failure to define project objectives Defining objectives keeps the project focused and an end point in view. Lack of senior management support A KM initiative is highly political and cultural. Support from senior management and staff involvement is needed to drive and keep the effort moving. Lack of employee coaching and training It is the staff that must discover, define, and identify knowledge issues, gaps, and opportunities. Employees must be educated to maintain awareness of what knowledge is, how to observe and identify valuable knowledge, and how to collect the necessary information. The knowledge audit results help IT executives identify organizational strengths and weaknesses, and gain insight into how the organization operates. Once the audit is complete, IT executives must develop reports, and communicate findings to senior management, SMEs, staff, and other participants. Moreover, they must establish an action plan to drive KM success. After a complete audit, many companies tend to find that the enterprise is lacking either cultural strengths or available technologies to support KM initiatives. Depending on the results, IT executives will need to develop strategies to address cultural weakness or technology requirements before KM process and technology implementation.Some enterprises that have achieved KM success include Dow Chemical Co. and the U.S. Government's National Aeronautics and Space Administration (NASA). According to Dow Chemical Co., it believes that corporate intellectual properties will be more valuable than its physical assets, and is working towards becoming a knowledge value management company. The company built an Intellectual Asset (IA) Management Model to align its portfolio of competitive assessments and strategies, as well as other knowledge, with its business objectives. Dow Chemical Co. executives can quickly review the IA portfolio, identify key assets, classify them by utilization, manage costs, and provide leadership and support of determined initiatives. According to NASA, it believes that knowledge has become more fractured. The agency continues to move towards a "faster-better-cheaper" (as appropriate) philosophy. In addition, NASA has dedicated staff that works on a project for a few years, and then moves on to new projects. Intellectual capital is NASA's primary source of competitive advantage. NASA realizes that its information environment, infrastructure, and processes need to be easily adaptable and quickly applied to new staff. Many areas within NASA already initiated KM efforts, such as collaborative tools, education and training programs, mentoring programs, and online communities. In 2002, NASA bridged the existing capabilities and resources to deliver an integrated suite of processes and tools to help share information across the agency. RFG believes a thorough knowledge audit must be performed prior to a KM project launch, to prevent wasted investment and dedicated resources on an initiative that is doomed to fail. IT executives must conduct audits to uncover knowledge gaps, issues, and opportunities for knowledge to reduce rework and drive new initiatives. A KM initiative that is worth implementing requires cultural acceptance, solid processes and practices, and technology to support business objectives.RFG analyst Mimi Ho wrote this Research Note. Interested readers should contact RFG Client Services to arrange further discussion or an interview with Ms. Ho.