#568  Innovative Leader                 Volume 12, Number 1        January 2003

Preserving Corporate Knowledge

by Hamilton Beazley, Ph.D., Jeremiah Boenisch and David Harden

Dr. Beazley is Chairman of the Strategic Leadership Group, Captain Boenisch is a communications officer in the U.S. Air Force, and Captain Harden is a pilot in the U.S. Air Force.  They are authors of Continuity Management (Wiley, New York, 2002).  

In the Information Age, knowledge has become the key to increasing productivity, enhancing innovation, and building competitive advantage.  But most corporations aren’t very effective in managing this knowledge. Data gets recorded and information gets filed;  but the Delphi Group finds that about 70 percent of a company’s knowledge resides solely in the minds of its employees. In this era of impending baby-boomer retirements and high job turnover due to downsizing, job-hopping, and increased use of the contingency workforce, knowledge loss has reached critical proportions.  The loss of 70 percent of an individual’s knowledge can be devastating and amounts to a wholesale asset give-away.  Preserving knowledge continuity between employee generations has thus become the new management imperative of the Information Age.  By implementing knowledge continuity procedures, a company can manage specifically to preserve and enhance its knowledge asset.  Ask yourself if your organization is plagued with any of the following crises created by knowledge discontinuity from the loss of departing employees.

Knowledge Vacuum

This crisis develops when only one or two employees understand the procedures, processes, relationships, and systems that are essential to the work of a team or department.  If they leave, and their critical operational knowledge has not been captured, a knowledge vacuum results.  A simple test for a potential knowledge vacuum is the Bob test:  When “Bob” is out, can anything get done?  If not and Bob leaves, his replacement will inherit a knowledge vacuum and have to start from scratch. 

Knowledge Panic

When someone, or some document, in the organization holds the knowledge the new hire needs, but nobody knows who it is or where it is, the result is knowledge panic in the new employee.  The required knowledge may even be in the predecessor’s files, but the filing system is quirky, or there’s no index.  Imagine the new employee’s frustration as she tries frantically to meet a deadline and hears only, “I know it’s around here somewhere” or “I’m sure I’ve seen it.”

Knowledge Bewilderment

This situation is similar to Knowledge Panic, except the new hires do have some knowledge.  It’s just not enough to do their jobs.  Desperate for knowledge, their only hope is to waste precious time hunting down information and the people or documents that presumably can supply it.

Information Overload, Knowledge Deficiency

This knowledge crisis develops when the new employee encounters an overload of information, but can access no real knowledge.  Furthermore, the information itself is worthless because it was organized and transferred in a format that rendered it unusable or indigestible.  Poorly organized, misclassified, or nonprioritized information may as well not exist.  In that state, it cannot be transformed into knowledge or used as information by successor employees.

Knowledge Stuffing

This crisis develops when huge amounts of information and knowledge are dumped on the successor employee, but the knowledge is obsolete, incorrect, or immaterial.  Highly relevant operational knowledge has been omitted.  Much of it may be in the form of dusty continuity books.  Some of it may be valuable, but who knows?  Such knowledge is time-consuming to analyze, integrate, or reject.  It is not worth tackling.  Rather than being productive for the successor, the knowledge is counterproductive. 

Knowledge Fantasy

This crisis, which develops out of insufficient knowledge, is likely to emerge in varying degrees as a companion to other knowledge discontinuities.  Successors develop false assumptions, fallacious theories, and mistaken principles to guide their decisions and actions as they wander through the labyrinth that operational ignorance creates.  In place of data, information, and knowledge on which to base their decisions, new hires rely on knowledge fantasies and knowledge guesses about what might be true.  Winging it is no basis for operating with confidence.  Errors are made, progress is stalled, and productivity is stunted.

Knowledge Rigidity

Knowledge rigidity is somewhat different from the other crises. It results from an organizational culture that is closed to change and resists any modifications of the way things are done.  Innovative approaches, new solutions, and imaginative responses developed by incumbent employees to deal with the exigencies of a rapidly changing environment go unharvested, unreported, and unshared.  Critical operational knowledge decays in relevance and applicability as new knowledge is ignored or twisted to conform to preconceived forms.  Knowledge rigidity leads to corporate decay and extinction as the organization denies or ignores the changing demands of its environment that pressure its established products, markets, or distribution channels. 

The knowledge lost from a departing employee is a long-term problem that breeds other problems and reduces an organization’s effectiveness.  It raises costs, decreases productivity, undermines competitive advantage, and erodes organizational competence.  On the other hand, effective knowledge continuity management creates a powerhouse organization that is responsive, innovative, and a step ahead of its competitors.  By using the principles on continuity management, you can prepare yourself and your organization to succeed in the turbulent business environment of the new century by retaining the critical operational knowledge that is 30% in the records and 70% in the minds of your employees.