How to ensure rightful performance of knowledge management programme in an organisation.

1. Performance of Knowledge Management
Dr. Elijah Ezendu
FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,
PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr

2. “Within the last years, nearly all major corporations started Knowledge
Management (KM) initiatives, particularly to strengthen the knowledge
base within the organization, especially to help employees share, activate
and increase their knowledge to finally generate a more innovative, faster
acting, competitive organization. Recognizing knowledge as the primary
intangible resource to make companies more efficient and effective was
the basis for the "knowledge-based economy" and for KM. Increasingly
sophisticated customers, new technologies, eager new competitors, and
the need for more innovative products forces companies to be able to
manage their knowledge assets well. The introduction of a KM initiative is
a large investment for many corporations. Therefore performance
measurement systems are required to make the benefits and the
performance of KM initiatives transparent. Especially in times of scarce
budgets the usefulness of KM is in doubt, as the business impact of such
initiatives often can be hardly quantified or is only indirectly measurable.”
- Florian Resatscha and Ulrich Faisstb

3. “The ultimate test of any business is whether it
leads to measurable improvements in
organizational performance.”
- Heeseok Lee and Byounggu Choi

4. Different Perspectives Regarding Knowledge
Exchange Outcomes
Source: David A. Bray, Benn R. Konsynski, Improved Organizational Performance by Knowledge Management

5. From Knowledge Management Enablers to
Organizational Performance
Source: Lee and Choi, Knowledge Management Enablers, Processes and Organizational Performance
Culture
•Collaboration
•Trust
•Learning
Structure
•Centralization
•Formalization
People
•T-Shaped Skills
Information
Technology
•IT Support
• Socialization
• Externalization
• Combination
• Internalization
• Organizational
Performance
• Organizational
Creativity
Knowledge Creation
Process
Knowledge Management
Intermediate Outcome
Organizational
Performance
Social
Perspective
Technical
Perspective

6. Hadanian, Borhani, Nekahi & Tolunia Perspective on
Influencers of Knowledge Management
Transformation to Organizational Performance
Knowledge
Management
Performance
Market
Orientation
Innovation

7. Contributors to Knowledge Management Maturity

8. Factors Affecting Effectiveness of Knowledge
Management Transformation to
Organizational Performance
Adapted from Rasula, Vuksic & Stemberger, The Impact of Knowledge Management on Organizational Performance

9. Dekings Four Quadrants of Knowledge
Management Measurements
Instrument (Example)
•Balanced Scorecard
•Intellectual Capital Audits
•Knowledge Portfolio
•Tobin’s Q
•CIV
Business Impact of
Knowledge Assets
Quality of Knowledge
Management Initiative
Location and Value of
Knowledge Assets
Business Impact of
Knowledge Management
Instrument (Example)
•Questionnaires
•Cross Organizational Benchmarking
Instrument (Example)
•Analysis of Knowledge Quality
•Technology Broker
Instrument (Example)
•Success Stories
•Cost Saving Analysis
•Scoring Models
Knowledge
Knowledge
Management

10. The generic methods for measuring
organizational performance in knowledge
management are as follows.
•Financial Measures
•Intellectual Capital
•Tangible and Intangible Benefits
•Balanced Scorecard

11. 6P’s of KM Performance by Elijah Ezendu

12. KM Impacts in Organizational Philosophy,
Processes, Practices, People, Products &
Partners
Monitoring and Evaluation of KM Impacts must
be managed as a Structured Change Programme

13. Performance Indicator
It’s a tool enabling the effectiveness of an
operation or organisation to be measured,
and allows an achieved result to be gauged or
evaluated in relation to a set of objectives.
Source: OECD

14. Properties of Performance Indicators
i. Relevant to the purpose, policy and practice
ii. Clearly defined
iii. Reliable
iv. Worth measuring
v. Measurable
vi. Galvanize action
vii. Reflect results of action
viii. Precisely defined as possible
ix. Readily available within a reasonable time frame

15. Advantages of Performance Indicators
i. Means of measuring organizational
progress toward set objectives.
ii. Give room for benchmarking and
comparing various units, sections,
departments and subsidiaries.

16. Disadvantages of Performance Indicators
i. Act as bad measures if not well defined
ii. Some vital indicators cant be easily measured
iii. Issuance of complexity due to number of
indicators

17. Key Performance Indicators in a Firm
These are quantifiable factors that are clearly
connected to drivers of business success in
a particular firm.

18. Criteria for Selecting KPI
i. Strong linkage to objectives
ii. They should be connected to areas of the
business that can be controlled
iii. They should be quantifiable

19. Types of KPI
1. Directional Indicators
2. Quantitative Indicators
3. Actionable Indicators
4. Practical Indicators

20. Developing Targets based on KPI
A Key Performance Indicator should drive
managerial effort towards a mark of
achievement, which is a target in accordance
with set objective.
KPI…….Reduce waste
Target……50% by end of March

21. Expression of Performance Indicator
• In terms of ratio of actual to standard
• In terms of number of occurrence
• In terms of a complex mathematical
expression showing extent of occurrence
• In terms of percentage of occurrence

22. North, Probst & Romhardt Performance
Measurement Framework for KM Initiatives
Cost indicators
)Class II(
Knowledge Base Indicators (Class I)
Business Results
System quality
Knowledge Quality
)Documents(
Knowledge Specific
Service
Costs of Interventions
Interceding Processes
System Usage
User Satisfaction
Knowledge Transfer
Within the Organization
Intermediation and
Transfer Indicators
(Class III )
Effect Indicators on
Business Results
(Class IV )

23. Classes of Indicators
Class of indicators Definition of term
Knowledge base indicators (Class I) Constituents of the organizational knowledge
base in qualitative and quantitative terms
Cost indicators (Class II) Processes and inputs for changes in the
organizational knowledge base (Costs)
Intermediation and transfer
indicators
(Class III)
Measure direct usage of the knowledge base and
the results of knowledge transfer resulting in
intermediate effects on the organization.
Effect indicators on business results
(Class IV)
Evaluation of the effects on business results

24. Examples of System Quality Measures
Performance Issue Indicator Implementation of performance
measurement
Quality of navigation
structure
How fast can the user find
the desired information?
Feedback buttons with ranking
possibility on every portal page
Quality of search
engine
Does the query result
match what the user was
searching for?
Average time of query to request, plus
feedback buttons
Quality of expert
search
Is the required expert
found quickly?
Average time of query to request, plus
feedback buttons

25. Examples of Knowledge Quality Measures
Performance Issue Indicator Implementation of performance
measurement
Quality of the
content
Quality of the provided
documents within the
repository
Feedback functionality attached to
single documents. Higher rated
documents are scaled up in the search
lists. A repeated usage might also
indicate a high-quality document.
Reliability, Up-
todateness,
Relevance, Accuracy
of the content
Are the files and
documents always up-to-
date and do they fit the
user's criteria?
Internal ranking, Feedback buttons,
Trust buttons referring to author of
document
Quality of experts Could the expert help? Feedback button referring to experts

26. Examples of Knowledge Specific
Service Measures
Performance topic Indicator Implementation of performance
measurement
Quality of
knowledge
distribution
Is the right knowledge at
the right time at the right
person?
Average time employees spent
searching the information
Support of
communities and
collaboration
Do communities of
practice share knowledge
more efficiently?
Feedback surveys of participants

27. Cost Types of KM Initiatives
Cost types Items
Hardware Server, Network, Infrastructure
Software Portal Software, Network: One-time purchases or
development costs
Implementation Consulting, customizing, training, and testing costs;
communication costs
Support (Maintenance) Annual system administration, support, and
maintenance costs

28. Examples of System Usage Measures
Cost types Items
Hardware Server, Network, Infrastructure
Software Portal Software, Network: One-time purchases or
development costs
Implementation Consulting, customizing, training, and testing
costs; communication costs
Support (Maintenance) Annual system administration, support, and
maintenance costs

29. Examples of Knowledge Transfer as Intermediate and Transfer Indicator
Performance topic Indicator
Knowledge
transfer from
organization to
employees
Period of vocational adjustment: The time to adjust a (new) employee to the given processes within the
company decreases, because most of the necessary knowledge is available easier.
Knowledge
transfer from
organization to
projects
Reuse Rate: indicates the percentage of failed objects. This performance measure can be applied to a
number of "re-inventing the wheel" cases: another measure is reuse opportunities ratio – the ratio
between actual reuse content compared to opportunities.
Knowledge
transfer from R&D to
production
Effectiveness of knowledge transfer from the Research & Development (R&D) department and the
production area. A rating-based performance measure shows the closeness of working relationships
between R&D and manufacturing using an internal self-assessment based on ratings.
Knowledge
transfer from
production to
Response time to customer queries: The response time can be tracked electronically and is closely
correlated to the customer satisfaction.
Response quality of customer queries: Average customer rating (internal and external) of overall technical
capability of the firm in providing technical service and new product
customer service innovations to bring value to the customers' future problems. Possible is an average rating by key external
or internal customers using a 1 to 5 interval rating scale to evaluate various dimensions regarding product
technology or process technology
External knowledge
spillover
Response time to competitive moves: Time required for corporation to match the newest product of the
competitor divided by the time required for competitor to match firm's newest product benefits. This
indicates the ability of the corporation to maintain a leadership position or to match technology moves by
the competition. The knowledge is generated by external experts, customers, supplier, competitors, and
research institutions.

30. Examples of Indicators on Business Results Based on
Balanced Score Card
Performance topic Indicators
Financials Shareholder Value, NPV, Profit, ROI, ROA, ROE, ...
Customer
Satisfaction
Number of refunds made, number of merchandising items returned, etc.
Explanation: the customer satisfaction may increase because of faster
response times and a better understanding of customer needs due to
external knowledge links.
Internal Processes − Efficiency of internal processes: e.g. percentage of tasks/milestones
achieved within a certain timeframe measures the efficiency of a
group/unit.
− Quality of internal processes: the fraction of tasks finished correctly:
Potentials A possible measurement approach could include the KVA methodology.
The process oriented view with learning time as basic metrics shows the
performance of business units.

31. Balanced Scorecard Measures in KM
Financial
Objectives Indicators
How should we appear to
our stakeholders?
Internal
Objectives Indicators
What must we excel at?
Customer
Objectives Indicators
How should we appear to
our customers?
Vision & Strategy
Objectives Indicators
How should the
organization look in the
future?
Learning & Growth
Objectives Indicators
To what extent are we
able to change, improves
and innovate?

32. Linkage Between Causes and Strategic Activities
Knowledge Management
Business Process
Improvement
Customer Relationship
Management
Budget & Cost
Management
Financial Results
Business Processes
Learning & Growth
Customer Satisfaction
Source: Balanced Scorecard Institute

33. Applicable Metrics at Various Stages of
KM Maturity
KMMaturity
Time
Pre-Planning Phase
Use scenarios & simulations to explore projected measure results & effects
Start-Up Phase
Anecdotes & qualitative metrics are most valuable to convince people of KM value
Pilot Project Phase
Use definitive metrics to show real value to business objectives
Enterprise Growth Phase
Use mixture of metrics to show value across organization

34. Cases Adapted from European Journal of
Scientific Research
1. Hewlett Packard
HP has a decentralized organization with little sharing of information across its units.
The business culture supports sharing but few units have been willing to invest in
efforts that do not have fast payback for the involved. There has previously been
some informal knowledge transfer when employees have changed business units. In
order to solve this problem knowledge management was implemented. The following
are the performance indicators identified:
•Active involvement.
•Number of participating employees.
•Number of postings/contributions.
•Number of downloads.
•Number of calls to support function.
•Support ratings.
•Unique log-ins.

35. 2. KPMG
The purpose of the KM system is to take advantage of the experience
within the organization, both in Sweden and globally. The overriding
objectives are to maximize value creation and realization for the
organization and for their clients, by making universally and instantly
available best practices, experiences, insights and connections to the
right people.
•Adoption curve to see knowledge culture progression.
•Generated business.
•Individual contributions to the further development of the
organization and its employees.
•Statistics of awareness.
•Number of contacts gained.
•Attitude of knowledge sharing.
•Efficiency & visibility on the market.
•Employee satisfaction.
•Re-use of information and/or experience.

36. International Oil Companies’ Adoption of KM
Company Adoption Of KM Origins Of KM
BP 1996
Organizational learning/best practices transfer in
upstream
Royal Dutch Shell 1995
Organizational learning initiatives by corporate
planning (e.g. scenario analysis, cognitive maps)
Chevron 1996
Best practices transfers & cost reduction in
Chevron’s downstream businesses
ExxonMobil 2003
In Exxon: application of IT to E&P. In Mobil, best
practice transfer in downstream
ConocoPhillips 1998 IT support for E&P
Schlumberger 1997 IT applications to drilling
Halliburton 1998 IT applications to drilling and seismic analysis
Marathon Oil 1999 IT applications to exploration
Murphy Oil 2000 IT applications to exploration
BHP-Billiton 2000
KM uninitiated by IT dept. - but not adopted
company-wide
Paragon
Engineering
Services Inc.
1999
KM practices based upon groupware, intranet,
project files, & other IT tools
Source: Robert Grant, The Development of Knowledge Management in Oil and Gas Industry

37. Motives for the Adoption of KM
Company Motives for Adopting KM
BP Amoco
Following radical organizational decentralization, KM viewed as mechanism for
achieving lateral coordination
Royal Dutch/Shell
In Shell’s highly-decentralized multinational structure, KM was a natural
complement to strategic planning and career management as an integrating
mechanism. With poor profitability during early 1990s, Shell came under strong
pressure to make more effective use of its dispersed talent
ChevronTexaco
Chevron’s adoption of KM driven by pressured for cost reduction during early
1990s. Resulted in strong interest in transfer of best practices
ExxonMobil
Mobil enthusiastic adoption of KM during the mid-1990s was driven primarily by its
desire to improve efficiency in E&P and in refining through improved identification
and transfer of best practices
ConocoPhillips
Expansion of exploration, especially in deep-water Gulf of Mexico, created need for
data management systems to support huge amounts of data being generated and
processed and link them to decision processes
Schlumberger Impetus for KM came from need to link rapidly advancing data management with
systems that linked human expertise in globally distributed operations
Halliburton
Marathon Oil
Desire to improve upstream performance through more effective linking of people
to people and people to information
Source: Robert Grant, The Development of Knowledge Management in Oil and Gas Industry

38. Activity
The management of a multinational company with operations in
40 countries spread across 5 continents embarked on
Knowledge Management Initiative focused on overcoming
geographical barrier in knowledge sharing by using alternative
means of communication. List the performance indicators that
can suffice in this programme.
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39. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise
in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround
Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e-
Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business
Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova
Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of
GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training),
Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management
Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead
Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited;
Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles),
Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping;
Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria;
Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic
Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria;
Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa;
Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost
Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of
Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business
Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of
Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting
intangible contributions of host communities and ecological environment: A model celebrated globally
as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host
communities. He had served as Examiner to Professional Institutes and Universities. He had been a
member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.

40. Thank You