The Business Case for Knowledge Capture and Transfer

Why should an organization attempt to capture and transfer tacit knowledge?  What is the payoff? 

We know that capture and transfer of critical knowledge can have both a direct and indirect payoff in all three ROI areas: 1) Increased Revenue; 2) Reduced Costs and 3) Improved Productivity.  But as is the case with intangibles, the devil is in the details. Part of the reason calculating ROI is difficult is because the payoff generally isn't immediate. It may take awhile before benefits are realized.  The payoff may take the form of cost avoidance, and it is difficult to measure the money saved from a disaster that never happened.

That said, we can get an idea of value by looking at some of the value elements organizations realize:

  1. Accelerated competency development - you are able to use the knowledge captured to bring new or less experienced performers up-to-speed faster
  2. Increased productivity - individuals and teams are able to be more productive and more effective ("doing the right thing as well as doing things right")
  3. Fewer operational disruptions, faster problem resolution - Often critical knowledge is tied to keeping the organization running. With more/better knowledge available, there are fewer operational disruptions and faster resolution of problems when they occur
  4. Increased agility, adaptability or innovation - Critical knowledge is often tied to markets and customers; anticipating and responding to changes; and proactively developing innovative solutions. Capture and transfer of this knowledge ensures organizations can anticipate changes and respond quickly.

The best way to achieve a measurable ROI is to choose the right project, one that meets these two criteria:

  1. Knowledge is critical (high impact)
  2. Results are measurable

In order to ensure results are measurable, you must have a clearly defined objective or perspective and starting point. In other words, what are you trying to do? For example:

  1. Reduce operational disruption
  2. Increase innovation
  3. Accelerate competency development

The better you are able to identify objectives and "current state" the easier it becomes to measure improvement.

For more on this topic, read Business Value of Knowledge Management: Return on Investment of Knowledge Retention Projects