Knowledge assets have been walking out of the door – is anyone taking note?

When I was leading our knowledge management strategy development at SmithKline Beecham in 2000, and then, briefly, part of the team driving GlaxoSmithKline’s KM strategy in 2001, there was a lot of talk about conducting exit interviews to capture people’s knowledge before they walked out of the door.

Reading Melissie Clemmons Rumizen’s very good and comprehensive “The Complete Idiot’s Guide to Knowledge Management” brought this back to me and yet, whatever’s happened to this concept?  She describes how the Tennessee Valley Authority (TVA) adopted a very structured approach to identifying in advance who was going to retire, and then prioritising interventions for immediate action based on the business impact of the knowledge that would be lost.  Presumably, exit interviews are equally worth considering in the case of maternity / paternity leave, and of course in the current climate in the case of redundancy.  Yet I’ve heard very little about any organisation addressing the need to capture knowledge before it ‘walks out of the door’.

I wonder how far organisations have really come in recognising that people are knowledge assets, rather than expenses? Karl-Erik Sveiby first raised this in 1979 when he left Unilever and started a business weekly: he recognised that the most important assets in an organisation had no value.  The knowledge that is held within people is a very intangible asset, as opposed to physical buildings or computer equipment, and yet this asset is so important to an organisation’s success.

As Melissie says, the difference between the book value of an organisation, and its market value can be very revealing about this intangible asset: IBM bought Lotus for $3.5 billion, whereas its book value was a fraction of that at $500 million.

Tony Buzan, in “The ultimate book of mind maps”, maintains that it would cost well over a couple of billion dollars to make a machine that could do everything that a human could do.

Of course the best solution is to capture, share and re-use knowledge within the organisation on a continuous basis.  My slide set on learning reviews in give quite an in-depth overview of how to do this.  Other excellent approaches are through the use of Communities of Practice, and best practice repositories.

However, it would be reassuring to know that organisations are not only taking note, but acting on the need to conduct structured exit interviews to make the most of the tremendous knowledge resource available to them before people retire, go on maternity/paternity leave, are ‘let go’ or otherwise leave the organisation.  Again, there are some excellent tools and methodologies available to help people to do this.  I’d be more than happy to discuss..

13 thoughts on “Knowledge assets have been walking out of the door – is anyone taking note?”

  1. The most challenging valuation issues involving international mergers & acquisitiion involve the determination of intrinsic value and post merger integration. I have been involved in various capacities (financial, legal, consulting, accounting) of various deals totalling over USD 1 billion. One deal involved the late Sir James Goldsmith.

    The IBM & Lotus deal clearly demonstrates not just the disparity of book value and purchase price but the collapse of intrinsic value when talent walks out the door post merger. IBM lacked the proper employment agreements and earnout agreements to ensure the post merger intrinsic value of the company would have some resemblence to the price paid.

  2. elisabethgoodman

    This is a very interesting insight. Pre-M&A agreements obviously have an important role to play in this kind of situation. Again, as per the comments in the Knowledge Management Experts LinkedIn discussion group, some of this has also to do with culture within the parent organisations around how knowledge is shared (and captured) on an on-going basis.

  3. I think you may find that there are more companies addressing this issue than might appear at first sight. We have been working with quite a few companies in this area, in the public and private sectors (most recently within the NHS). This is an issue that is gaining more and more prominence.

  4. The time it takes to build skills is often much longer than a product, market or even a company life-cycle. However ?american? consultancies have encouraged us to hire the skills we need and fire the ones we don’t .. rather than training and retaining. Like so many paradigms when everyone is doing it you get some unintended consequences!

    In many cases, this is a real opportunity for competitors .. and for staff to set up as competitors to the organisations they leave. Often the so called lean organisations ‘gets left with the overhead’ and will be beaten by an entrepreneurial yet experienced team familiar with the market.

    More fool the donor business.


    1. elisabethgoodman

      Peter, thank you for commenting. What you say is so true!

      However, I’ve heard of some organisations that have found what seems like a win-win approach – which is to help those that are made redundant to set up as consultants (maybe even as a group pooling their expertise), with the donor business being one of their significant initial clients. I know of at least one organisation here in Cambridgeshire that has done just that, albeit I think with just the one person.

      This might be an interesting model to experiment with…

      1. Elizabeth, thank you for you article; Peter, thank you for your nice comment.

        In reply to you last comment I’d like to say that nowadays, in times of global recession, massive fires and etc. many fired people could use such a business model, but I still haven’t heard about any.
        Anyway, this model looks like a good way of starting an own consulting business in the form of partnership.

        I’d like to see if many little businesses will be started in such a way these times (e.g., by the beginning of next year).

        1. elisabethgoodman

          Firenzi – yes, it’d be good to hear about businesses adopting this model. I heard of one last night and, with their permission, plan to write-up a case study in these pages in the coming days / weeks of their experience so far.

  5. Dear Elisabeth,

    Thank you for your post. The Shell Oil Company has a very strong knowledge retention program called ROCK (i believe it means Retention Of Critical Knowledge) (sorry the link is in Dutch). A structured interview of knowledgeable company leavers by a diverse team of young potentials. The heavy people involvement credits the notion that knowledge resides in people and can (by principle) not be stored in a database. The interactive style gives credit to the notion that knowledge sharing = interaction.

    Regards, Bart

    1. elisabethgoodman

      Bart – this is great to hear about. You’ll see I’ve started posting case studies about what organisations are doing in areas such as knowledge management and team effectiveness. Do let me know if you’d be interested in creating an English account together of what ROCK is about!

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