Know-how: tips to manage your information load Part II
A few weeks ago I discussed the importance of business relationships as the first key to effectively managing knowledge.
This time I will explore how knowledge capture was incorporated into internal processes and business practices to align offerings with customer needs and reduce the SMEs’ cost structure.
Applying knowledge to preserve resources through managing the basics.
Strong leadership and management discipline was applied to “picking and resourcing new opportunities”. New ideas were discouraged by the CEO unless they met stringent criteria of demonstrated: strategic ‘fit’ (with the knowledge and capabilities of the firm), viable market size and a feasible implementation strategy.
Know how from past experience had shown how staff can be motivated by new opportunities but that this interest can wane during the, often laborious, market development process.
Diversion to other, new ‘exciting’ opportunities at this stage can be disastrous for an SME as scarce resources are diluted, endangering the success of current ventures. In this way, the number and variety of products and services offered was limited to those with the strongest ‘fit’, reducing complexity. This helped ensure new offerings had sufficient revenue potential to cover the cost of additional organisational infrastructure they generate – (i.e. systems, procedures, inventory, staff etc.).
Preserving resources through reduced cost structure
Complexity equals high cost. The more complex a business’ operations, the higher its costs for a given amount of revenue.
Recognising and acting on this knowledge is important to SMEs as they operate in an environment of resource scarcity. Reducing complexity preserves resources and offers the potential for enhanced returns on capital, and on effort!
As mentioned business knowledge was used to ensure that sales offerings aligned with the knowledge and capabilities of technical staff.
In addition, the CEO and senior management generated a shared awareness of the importance of managing the business basics (working capital and the quality, flexibility and productivity of key operational procedures) to preserve cash, internal expertise and management attention.
So how did knowledge management help? Firstly, business knowledge was embedded in formal controls (for documentation and quality assurance of key operational procedures).
It was also shared informally through advice and guidance, and introduced into the SMEs’ culture through the use of particular terms or ‘adages’ which embodied knowledge.
At the SME some terms become part of the dialogue about new products and operational improvement. Regular reference was made to whether processes were “repeatable”, an adage that carried knowledge, continually reinforcing the message that operational procedures must be streamlined and ad hoc responses should be avoided. In other words, complexity must be reduced and where flexibility was needed (for customers or operational requirements) it must be designed into procedures rather than have separate processes developing to deal with one-offs.
Using knowledge to reduce complexity and manage the basics liberated scarce resources to sustain the development of the SME’s best opportunities.
For more information on the Knowledge and Resource Research Group click here.
