Know-how: tips to manage your information load

| December 6, 2010

Dr Rodney Coyte put a SME under the microscope and discovered cracks in conventional wisdom about how to manage information in smaller organisations.

Plenty of work has been done assessing knowledge management practices in large enterprises, but a research gap exists when it comes to SMEs.

Read the first stage of Dr Coyte’s findings and advice on how mid-size companies can better manage information and boost profit-making.

Relationships – the first key to effective Knowledge Management

By Dr Rodney Coyte

How do you get the most out of knowledge captured and created by your firm?

It’s a question often asked and does require an answer customised to the nature of the business and its competitive context. But there are some general principles that apply to all businesses.

Rodney Coyte photoWhy does it matter?

Poor knowledge management structures and processes can have heavy impacts for SMEs ranging from inefficiencies, dilution of effort and repeated mistakes. Getting these practices right helps direct time and resources to core business, and improving the bottom line.  

A rare glimpse

Along with my colleagues Professor James Guthrie and Federica Ricceri, I conducted a project to study knowledge management processes in an innovative, high-growth Australian SME. Few detailed studies have been conducted in small and medium-sized companies, so our research was novel.

The firm (Firm X) we investigated sells and supports technology solutions under licence, and has also begun successfully developing its own software.

Firm X is a typical First 5000 enterprise:

  • Turnover $10M+

  • Six years of operation

  • More than 50 employees

  • Achieving consistent annual growth approaching 20 per cent 

I wanted to track the ways knowledge was created and how it was ‘harvested’ to provide and support profit making opportunities. 

Here’s what we found.

What we observed in Firm X was a mix of formal and informal knowledge management procedures. Some information was documented, some was managed through processes of debate and dialogue in meetings.  Sales and marketing information for example was largely informal knowledge, managed without policies and procedures, yet information was effectively captured.

Practices and guidelines for the management of knowledge dictate that information capture should be formalised. But for Firm X, this wasn’t always the case. And what’s more, a lack of formalisation in some areas wasn’t a drag on business performance.

Central to the SMEs’ approach was a clear focus on managing relationships. Other characteristics of knowledge management practices included a careful choice of new opportunities combined with a stubborn refusal to have attention (and resources) diverted from previously selected ventures, and a shared awareness of the importance of managing the business basics to preserve cash and internal expertise, to adequately resource existing ventures.

I’d like to focus on the first element – managing relationships.

Stay connected

Recognising external relationships as a major resource, Firm X leveraged them at every opportunity. Marketplace reputation was crafted by stringent adherence to a clear strategy.

Management recognised the resource dilution effect of unnecessary variety, such as product and service diversification, meant a loss of focus, increased complexity and a higher cost structure. It’s a combination that can suck resources away from core products and services, and leave no room for new opportunities. While strategy was not formally documented — it didn’t need to be in a SME of this size —it was explicit in communications and modelled in choices made.

Keep talking

Communication with clients by sales staff, management and key operations staff was active and continuous. Understanding customer and industry activities and new projects was vital to positioning for new sales opportunities, as was the maintenance of relationships with major third party suppliers.

Managing internal relationships is equally important. Somewhat paradoxically, Firm X specified overlapping responsibilities and rotation of responsibilities in operational roles. Paradoxical as it suggests inefficiency, but effective as flexibility is enhanced and customer and operational knowledge is more broadly captured, leaving the organisation less vulnerable when experienced staff leave.

Overall, enhanced business performance was supported by discipline around maintaining a consistent market positioning of product and service offerings (strategic positioning), and a focus on aligning the management of relationships for knowledge capture and use.  

Dr Rodney Coyte specializes in research combining strategy and the management of resource development and deployment in organizations. He chairs a research group at the University of Sydney facilitating industry and professional linkages around events and joint projects to better understand knowledge development and resource management processes in organisations.   

For more information on the Knowledge and Resource Research Group click here.