KM is a Bad Bet?
Stephen Bounds has a fascinating piece of calculation using Monte Carlo simulations on the likely benefits of KM interventions targetted at preventing knowledge failures. He concludes:
“In particular, the outcomes of my experimentation suggest that many across-the-board KM … untargeted interventions inevitably try to achieve smaller improvements across the board, typically in situations where there is a low probability of failures occurring. The Monte Carlo simulations demonstrate that for a substantial number of organisations, even successful attempts to reduce knowledge failure risk by, say, 10% may have a negligible effect on bottom-line savings over a sustained period of time.”
I’m not sure that something as context-dependent as KM can successfully be modelled using a method more suited to chaotic environments than humanly complex environments, especially when the unit of measure is reduced to a financial one. Human systems have intrinsic ambiguity in them, especially when you try to resolve things down to financial measures. For example, the work involved in addressing small knowledge failures might be legitimately identified by different parties either as an avoidable cost or as an investment in building the experience of a new member of staff, depending on the context or even the stance of the interpreter. So I’m reading this as more of an interesting exercise in raising questions and identifying issues for exploration, than in addressing the old, simplistic ROI debate.
And of course it does not address other reasons for doing KM apart from cost reduction/avoidance – eg if KM is simply the price for staying in the competitive game or insurance against major calamity.
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