Tuesday, 8 March 2011

Rediscovering the Lost Art of Strategic Knowledge Management in Business Administration

All strategies are knowledge strategies - in the sense that your strategy is the product of a series of conscious or unconscious knowledge choices.

Sometimes it can be helpful to go back to basics. Strategic knowledge management is taught in business administration courses, like the ones profiled on this MBA degree site. However, when professionals enter the fast-paced environment of the real business world, they sometimes leave the fundamental tools and lessons of school behind them."

A few years ago, I was consulting at a senior level in a business where every year more money was being pumped into product development and yet the number of products getting to market was static. Reviewing the data within a variant on the porter Competitive Advantage matrix (price and product differentiation) was leading us into a 2nd-best trap of minor differentiation because low risk had become the name of the game. Similarly, productivity was being affected by dangerous, institutionalised assumptions that the minute survival ratio of successful products to prototypes and high attrition (failure) ratio required a necessarily large population of prototypes to work from to grow the business.

This low survival rate of successful prototypes was demonstrated to be another example of groups within the organisation exploiting and corrupting measurement systems over time (in other words if you want lots of prototypes that don’t work and will pay for them, we will provide them for you). However, the failing business model and associated strategy required a more indirect approach to open up and articulate the underlying and often tacit knowledge it was based upon which was clearly not working.

I noticed that although we had a lot of data about the situation, we never discussed the emergent strategy or tested the knowledge it was based upon. Although we talked about innovation, people seemed to think they were already doing it. Whenever I asked to see the organisation’s “innovation process”, they kept pointing at the New Product Development process (sometimes called the pipeline). The first problem was that we were committed to a default strategy that we never discussed and it was killing us; and the second problem was that people thought that the NPD or product pipeline WAS the innovation process, and thus it was impossible to question the business model or the potential for creating new value services around the old core products.

No-one was willing to directly question the business model that involved spending so much to deliver less. I decided to take another approach, and lead a disguised strategic conversation exercise through metaphor, based upon the 9-dot problem.

You know the one where you are asked to connect 9 dots in a box arrangement of 3 lines of 3 dots, using only 4 continuous straight lines. Usually what happens is that you try and try to solve this problem and it’s only when someone shows you the “arrowhead” pattern that extends the lines outside of the box that you realise that you sometimes have to step outside the box to understand the problem and see a solution. Working within the current emergent strategy was a bit like trying to solve the problem by staying within the box with similar emotional frustrations - in that it didn’t matter what you did with your resources, you still couldn’t solve the problem with current thinking. Having made the connection with the strategy, the next step was to invite people to connect the 9 dots using just 3 consecutive straight lines. After initial astonishment and disbelief, people would ask whether they could break the rules and in effect began to question their own constraining assumptions. We then transferred this thinking to our emergent strategy to ask ourselves: just what were the constraining assumptions? We then applied “reality checks”. Were these constraining assumptions still true, did they still constrain us? In every session, with a bit of preparation, the same 6 constraining assumptions that made up the organisation’s success formula would appear and we would demolish or modify them in the light of new knowledge and market changes. The outcome was a populated matrix or portfolio of new strategies that defined new freedoms to innovate in the language of the organisation. The scariest moment was presenting this to the head of new product development when he said: “you know, I only ever get to think like this on my own, late at night…”

There is a big difference between being efficient and effective. All strategies are knowledge strategies. Make sure that the knowledge you use to build your strategic choices is still current. Thinking outside of the box involves being a stranger to the familiarity of your own organisation. Knowledge is like fruit, the highest value is only realised when you connect the timing of the fruit ripening to the moment of the customer’s hunger. Don’t keep selling old fruit to people who aren’t hungry. Make sure your strategy is based on fresh knowledge, and that any old knowledge that remains within your emergent strategy is still edible and not past its sell-by date.


1. How long has the current strategy got left?
2. How good is the knowledge you are paying attention to?
3. What is the knowledge you are deliberately ignoring, and why?

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