Sveiby - Knowledge Management

The Knowledge Organisation

by
Karl-Erik Sveiby

Unauthorised copying prohibited.

INDEX.

  1. The Knowledge Organisation.
  2. The Market Value.
  3. The Personnel.
  4. Corporate Knowhow.
  5. Corporate Image.
  6. Investing in Intangible Assets.
  7. Attract the Customer.
  8. Attract the Personnel.
  9. Develop the Competence of the Personnel.
  10. Utilising Capacity.
  11. Matching Capacity and Demand.
    11.1. The Vicious Circle.
  12. Managing the Strategic Dilemma.
  13. Customer Strategies.
  14. Personnel Strategies.
  15. Pricing.
  16. Some Critical Incidents.
  17. Management Information.

16. Some Critical Incidents.

1. Too high or too low staff turnover.

A "normal" staff turnover varies between 5% and maximum 15-20%), i.e. the key people stay between 5-7 years and 20 years.

High turnover is a sign of discontent. The high turnover might be due to:

A very low turnover is a sign of a stagnant or shrinking organisation or a too complacent personnel. This is not satisfactory either, since it reduces the dynamics of the organisation.

2. Tough Competition in the Niche.

If the competition feels too tough we might have to change the strategy. A Knowledge Organisation has two choices in such a situation:

  1. Select customers according to personnel and competence, "Inside-and-out".
  2. Attract key people which will fit the most attractive customer segment, "Outside-and-in".

3. Too Competent Personnel.

A not too unusual situation is that the key people have "outgrown the customers". What are the solutions (except allowing the people to leave)?

  1. Attract more challenging projects by reducing the prices.
  2. Attract more junior key people and allow the most competent of the personnel become project leaders. This increases the capacity and is only possible if the market is favourable.
  3. Start R&D-projects in order to increase the competitive edge in a new area. (Is possible only if there is money available).
  4. Start subsidiaries or encourage spin-outs.

4. Too high Profitability.

To have too high profits is perhaps not considered a very critical incident but the high profitability might be the consequence of:

  • Under-investment in R&D, which is long-term detrimental.
  • "Volume-sickness", which is a decease often afflicting managers and knowledge organisations grwing along the organisational track.
  • Over-utilising the personnel, which will cause burn-outs.

    5. The Best have to Work too Hard.

    The best among the key people often work far too hard. This is partly due to their own workaholic nature, but might also be the consequence of a negligent personnel planning. The best consultants are in high demand, their customers want more and they attract new customers. It is therefore far too easy to allow them burning themselves out, which will cause both personal and company catastrophes.

    7. The Spare-Tyre Effect.

    When left unattended, the age pyramid is certain to become distorted. The "spare tyre effect" comes from the fact that the leaders tend to recruit key people of their own age. When the 25-year-olds become 35-year-olds they usually find good reasons to recruit 35-year-olds, etc ... . In this way a spare tyre develops round the company's midriff, consisting of professionals of the same age and outlook who try to maintain their positions and status. The best way to avoid this problem is to have a constant inflow of apprentices who grow with the company. A growing organisation can thus avoid the spare tyre effect, but the non-growth organisation with low personnel turnover usually finds it much harder.

    8. The Proletariat of the Assistants.

    Most senior professionals find many logical reasons why they need lowly paid assistants or secretaries in order to increase their own dearly paid efficiency. The proletariat of the assistants however, tends to increase the bureaucracy, cause subcultures and reduce overall efficiency. A more effective way is to recruit more senior professionals and to insist that they shake their own bottles or learn word processing...

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