Business mentor: Staff valued for their banks of knowledge

Q: How can we get the knowledge economy to work in our small business? My problem is sharing knowledge about what we do while retaining security. What I know is what someone will want to buy when I sell the business, and a lot of this is intangible. I also have trouble training new staff. I hate to think what training costs us, but staff need certain knowledge to do their work.

* Small business sector specialist Sarah Trotman asked Worklinx Systems managing director Malcolm Dennis for advice

A: Intangible knowledge (IK) is the toughest sector of knowledge management (KM) in any business.

Most businesses have not found a way to make the intangible knowledge tangible. It's too big a challenge. So where would you find the IK in your business?

You've probably guessed already - IK is held in the minds of your staff.

IK has been referred to as habits or routines. Habits can be described as the things you don't know you do. Staff certainly know what they are doing. They do their work right, it gets results, and without them doing those things the business would have serious problems.

But precisely who knows what they do?

You discover what's intangible when staff are away. The best test, but sometimes an expensive experience, is to find out what happens when particular staff are away. Many business-owners have discovered their IK when a staff member calls in sick or is delayed back from a weekend or leave.

Nobody else knows how to do particular parts or all of their work. The IK in their work has to be discovered and made tangible quickly. People have to find out what and how the work gets done. The customer is waiting for action.

Some business buyers like KM, others don't. Knowledge management adds value to a business. The knowledge of a business is called intellectual capital (IC). Some business buyers value IC; they won't buy a business that doesn't have sound knowledge management represented by an IC value on the asset register.

A good example is a person who buys a franchise. The major value in a franchise purchase is the IC value of the business system. The business system is usually a proven way to make money.

Buyers who want a bargain business look for poorly run enterprises where KM doesn't exist so there's no consideration for IC in business systems. There are associated risks in buying a business where knowledge has not been documented, but other values may be appealing, such as undervalued assets.

Implementing a sound KM system in your business, including capturing the intangible knowledge, will put a serious value on the IC of your business. This means all businesses without comprehensive KM can greatly increase the value of their asset register by implementing such a programme.

This brings new meaning to succession planning. Too many succession-planning programmes ignore this aspect of business value. Too much focus is placed on other capital and asset values while neglecting the one key area of a business that makes the sales process and new-owner transition more seamless. An existing owner can quickly demonstrate how the business systems will work regardless of ownership. The knowledge management systems will ensure this happens.

We have developed a knowledge management software called Worklinx. It provides a fully integrated datafile where all work procedures are stored in multi-retrievable formats to provide instant access to all work procedures data.

* For more information view www.worklinx.co.nz or contact Malcolm Dennis on 0800 4worklinx 496 755.