Originally published on March 13, 2018

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This is the 13th article in the Profiles in Knowledge series featuring thought leaders in knowledge management. Verna Allee holds an M.A. in Organizational Leadership and Human Consciousness from JFK University and a B.A degree in Social Science and International Business from the University of California, Berkeley. After a distinguished career in knowledge management and value networks, she retired in 2011. Although her personal web site and much of her content is no longer accessible online, I have retrieved it through The Wayback Machine of the Internet Archive and made it available here.

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Verna began her management career in 1975 as the co-founder of a networked sign manufacturing company. She organized the new company as a value network — a radical idea at the time. Within five years, the company was handling large installations from Alaska to Florida and revenue had grown to match some of the largest companies in the industry. Determined to carry her insights into global companies, she developed the ValueNet Works methodology, the cornerstone of ValueNetworks applications.

Profiles

  1. About Verna

Discussions

1. Preparing for Conversations with Verna Allee — April, 2003 — Knowledge, Networks and Value Creation

Introduction

The first job of a manager is not to make decisions but to make sense. — Alan Weber, Fast Company

There is really only one management question: What do we need to pay attention to in order to be successful? Business people knew what to pay attention to thirty years ago: profits, expenses, production, and labor. While those are still good business fundamentals, in the last few years we have begun to appreciate that we need to expand our focus and pay attention to very different things than we have in the past.

  • We now know we need to pay attention to knowledge, understanding how to better leverage organizational knowledge and intelligence to create value.

The larger story behind these new perspectives is the way organizations themselves are evolving. The natural network patterns of business are beginning to dominate working life. Like a universe expanding, the reach of every company is expanding with the help of the Internet, which itself expresses the principles of a living network. Boundaries are fuzzy and permeable. Successful networks are built on complex, mutually rewarding, and trusting relationships. Central control is not only impractical; it is becoming impossible. Instead of mandates passing through chains of command, we find streams of data and information flowing in every direction, empowering people to make their own decisions and adjust their actions according to a shared common purpose.

To develop the skills and knowledge we need for the emerging economic order, we are engaged in a massive business-learning journey. The meta-level learning that we are all engaged in is-learning to work with network principles.

In the course of this conversation, we will look at how these different themes are weaving together into a more coherent understanding of enterprise from a living systems perspective. Now, don’t worry that this all sounds very theoretical. Kurt Lewin o reminds us that there is nothing as practical as good theory. After all, when all is said and done, it is not knowledge alone that is important-but how knowledge and intangibles can be leveraged to generate real value and business success. I will demonstrate through stories and examples just how simple and practical a value network perspective really is.

How to Prepare for This Conversation

The emphasis in this conversation will be on the processes of knowledge and value creation, particularly through network perspectives and methods. I assume that most of you are generally familiar with practices in knowledge management, communities of practice and intellectual capital. If you are not, then I suggest you review the archives of the previous Star Series conversations with Hubert Saint-Onge and Karl-Erik Sveiby, whose work is especially relevant to what we will be discussing. In addition, you might want to check out the following articles:

Those of you who are interested in living systems might want to pick up a copy of Fritjof Capra’s book The Web of Life. I also strongly encourage you to get a copy of my new book, The Future of Knowledge: Increasing Prosperity through Value Networks, which fleshes out many of the themes we will be exploring.

2. Preparing for Conversations with Verna Allee — February, 2006 — A Maxim a Day Keeps Disaster Away

Pre-Dialogue Remarks

max . im (noun)

  1. a succinct or pithy saying that has some proven truth to it

Five years ago an AOK dialogue serendipitously began what we now know as the STAR Series. Yipes! Has it really been that long? Steve Denning (then at the World Bank) and his colleagues Michel Pommier and Leslie Shneier asked if ‘rules of KM’ were forming and started us off with a few pithy principles of KM such as:

  • Knowledge sharing is essential to economic survival

In the late 1990s we had Larry Prusak’s enemies of knowledge management that included cautions against mechanistic thinking, over reliance on technology, top down KM. He reminds us that knowledge is in groups — not individuals. I proposed a “delightful dozen” of my own in my 1997 book with things like “knowledge is messy; knowledge seeks community, no one is in charge” and so on.

Lately I have been trying to “catch” myself and notice what maxims keep falling from my lips on a fairly regular basis. I can’t help but notice that they seem to have changed or evolved over time to quite a different set. (This is a good thing I think because it might indicate that I am teachable and accidentally learning something from time to time.)

So, for this stint on STAR Series (gosh, I love that title!) I thought it would be fun to have a conversation around our “favorite maxims” and “hot questions.” We all have favorite little maxims and pithy sayings that come up over and over in our conversations. Can we reflect on what we are relying on most heavily at this particular point and what is the larger issue underlying it? These might be tried and true classics or might be ones that have come to the forefront as being especially compelling or meaningful right now.

What are the tried and true principles that you have come to believe in even more deeply than when we began? What has withstood the test of time? For me I think one would most surely be those around community: knowledge seeks community (Allee), knowledge is in groups (Prusak) and communities of practice are the heart and soul of knowledge sharing (Denning et al). That was a theme we all hit on in the beginning and it seems to have become an even stronger theme today. In fact I cannot think of a single company known for excellence in knowledge sharing that does not use a communities of practice strategy. They might call it something else — knowledge networks, expert communities or something like that — but the supporters and champions are quite explicitly applying community of practice principles.

What are some of the other “classics” that have withstood the test of time and practice? What are the ones that people still find most relevant today?

I notice too that there are also some “emergent” maxims that I am relying on quite a bit. What are the new principles and issues that are beginning to emerge and how do they help us tell our KM story? What are we saying or emphasizing differently today than what we might have said a year ago? Where are the edges of a real breakthrough in perspective for us personally, more broadly across our field, in management practices, or more directly within an organization you are working with?

Here is an example of a somewhat newer one that I find myself iterating over and over: “We are moving from a world of jobs to a world of roles.” This shift of perspective is critical in understanding the changing foundations of how we organize work. As we become more and more networked people we negotiate more around projects and our roles in the project. Yet, we are often stuck in job descriptions that don’t allow for these other roles. LaVeta Gibbs, whose group heads up all the contact centers around the world for Cisco sums it up pretty well. She says, “Our group is funded for the obvious role of providing knowledge to the customer. Yet we are capable of playing and even expected to play other roles. We play an analyst role in understanding the customer feedback we get, an advisory role into the strategy and decision-making activities, a consulting role to production and we are innovation partner for development. How can we make those other roles more visible, supported and appreciated both in my own group and in the larger organization?”

Another little principle I put forward is to remind people that we just made up the concept of “the firm.” I love this quote from Peter Drucker in 2000 for Fast Company. “The corporation as we know it will not survive the next 25 years. Legally and financially perhaps, but not structurally and not economically.” (Of course we are now 6 years into that prediction.) What if “the firm” as we know it becomes just one organizational form of many? What is emerging? Then how do we organize, how do we make decisions, how will accountability work? If we are truly in a world of collaboration, roles and projects then we will need to learn how to “make up” very different forms of organizations, yet as a general business population this is not something we have been trained to do.

A personal favorite and one that usually sparks a lively discussion around leadership is “You cannot administer a network you can only serve it.” Our illusion of and desire for control is so pervasive in business thinking that this maxim requires an enormous shift of perspective. I first heard something similar from Meg Wheatley who says, “You cannot fight a network with a hierarchy.” This principle is proving quite powerful in my business conversations.

Here is another one that I find is a powerful punch line: “If you don’t have a way to tell your story other people will make it up for you.”

Everywhere I go now people are expressing deep frustration with the performance indicators that are driving their decision making — and they feel helpless to fight them. Their “hot question” is “how can we fight back?” When we explore this we find that they are being given mostly industrial age performance indicators or financial measures such as financial ROI, revenue and cost reduction, which are mandated by some politician or CEO. In KM we have rather conveniently side stepped the educational work around the intangibles story and now it is coming back to bite us in an uncomfortable part of our anatomy. Without this foundation the people we are asking to support our efforts have no way to tell the story of why we should do it or demonstrate the big wins on the non-financial aspects of building capability. There is a learning curve in how to speak this language and I see KM people expressing the same frustration with metrics — where in my view it is our job to develop, tell and educate people into that new story. Even when I introduced this topic in the last STAR Series it generated more whining than productive suggestions for how to get on with the job.

Here are a couple of other quickies:

  • Transformation happens one darn person at a time. (Sigh)

Anyway, you get the drift. So I am curious — what, for you, are the tried and true “classics” and what are the newer or “emergent” maxims that you find yourself relying on in your current conversations?

3. Questions on Verna Allee’s Value Networks presentation to SIKM

Articles by Others

  1. Questions to Verna Allee on how to start a Value Networks analysis by Peter-Anthony Glick

Verna’s Web Site

1. Site (older version)

2. Blog

3. Books and book chapters

4. Recommended Books

5. Selected publications

6. Interviews and more

7. Videos, podcasts, and webinars

8. Value Networks

9. Open Value Networks

10. ValueNet Networks

How to Guides and Tools

1. How-To Guides

  1. Selected modules, excerpts, and tools from the ValueNet Works™ Fieldbook

2. Tools

  1. Value Networks Glossary — Verna Allee

Content

1. ResearchGate

2. What is ValueNet Works™ Analysis?

3. Value network analysis and value conversion of tangible and intangible assets

4. The value evolution: Addressing larger implications of an intellectual capital and intangibles perspective

5. The art and practice of being a revolutionary

6. A Value Network Approach for Modeling and Measuring Intangibles

7. Value Creating Networks: Organizational Issues and Challenges

8. The Seeds of Knowledge

9. Knowledge Networks and Communities of Practice

10. Knowledge Links™ Individual Survey and Interpretation of Results

11. eLearning is Not Knowledge Management

12. Reconfiguring the Value Network

12 Principles of Knowledge Management

Understanding knowledge is the first step to managing it effectively. Here are a dozen characteristics of knowledge, and some tools and approaches for making the most of the knowledge assets in your organization.

Winston Churchill said, “The empires of the future are the empires of the mind.” Tom Peters said, “Heavy lifting is out; brains are in.”

Stately or slangy, it’s a fact that knowledge is edging out buildings and gear as the essential business asset. Even advertising and marketing use such words as knowledge, intelligence, and ideas. When many companies must innovate or die, their ability to learn, adapt, and change becomes a core competency for survival. Most seek more knowledge through training, education, and career development. Every business is a knowledge business; every worker is a knowledge worker.

The knowledge economy has brought new power to workers. Many are “free agents,” contingency workers that make up almost a third of the U.S. workforce. Workers own the means of production-their knowledge. They can sell it, trade it, or give it away and still own it. As a result, the ways we manage people have undergone a dramatic, fundamental shift.

Knowledge is perishable. The shelf life of expertise is limited because new technologies, products, and services continually pour into the marketplace. No one can hoard knowledge. People and companies must constantly renew, replenish, expand, and create more knowledge.

That requires a radical overhaul of the old knowledge equation: knowledge = power, so hoard it. The new knowledge equation is knowledge = power, so share it and it will multiply. Widespread noncompetitive benchmarking and best-practice sharing show how eagerly we are embracing the concept of knowledge sharing.

Hubert St. Onge, who led the development of the knowledge management approach at Canadian Imperial Bank of Commerce, sees the primary challenge as making an organization’s unarticulated or tacit knowledge explicit so that it can be shared and renewed constantly.

“It is important,” he says, “to understand how knowledge is formed, and how people and organizations learn to use it wisely.”

12 guiding principles

A navigation technique is to look at the stars to tell you where you are. Similarly, we must use a powerful new “knowledge lens” in order to navigate or manage our companies. But we can’t manage knowledge in a traditional way. Always changing, knowledge is more organic than mechanical.

Nevertheless, here are 12 fairly steady principles about knowledge.

  1. Knowledge is messy. Because knowledge is connected to everything else, you can’t isolate the knowledge aspect of anything neatly. In the knowledge universe, you can’t pay attention to just one factor.

A concern about knowledge sharing emphasizes communication flow and documentation. A focus on knowledge competencies leads to seeking more effective ways to create, adapt, and apply knowledge.

At sea

Managing knowledge requires the appropriate tools. Here are some navigational aids.

A north star. A north star represents the purpose, sense of identity, and core principles that guide an organization. Knowledge self-organizes around organizational purpose. Without a north star for knowledge, it’s impossible to focus on what is needed.

The driving values for creating and sharing knowledge may differ. At Buckman Laboratories, for example, the driving value is knowledge of customers. With the implementation of the K’Netix knowledge sharing network, Buckman began treating knowledge as its most strategic asset. CEO Robert Buckman takes knowledge leadership seriously. He says, “For knowledge sharing to become a reality, you have to create a climate of trust in your organization.”

At Canadian Imperial Bank of Commerce, the emphasis is on building knowledge capital. At Chevron, CEO Ken Derr emphasizes commitment to learning through sharing best practices for continuous improvement. But the common element at the core of those different approaches is knowledge.

Companies that are serious about knowledge often create formal knowledge-management functions. A knowledge leader sets the course and attends to the knowledge creation process. For example, a job title at Philip Morris is knowledge champion. Monsanto has a director of knowledge management. Dow Chemical has a director of intellectual asset management. In other companies, human resource executives may become knowledge managers or directors of organizational learning. Companies such as Owens Corning create centers of excellence to facilitate knowledge creation and sharing.

A compass. An organizational compass consists of guiding principles and strategy. Best-practice companies in knowledge provide a way to expand knowledge by taking an integrated, multimodal systems approach.

Successful strategies for the knowledge era ensure that people can create and expand common languages around their work. Examples include the implementation of total quality management at Motorola and General Motors. By providing new process-analysis and problem-solving tools, TQM expands organizational intelligence.

Texas Instruments and Chevron are noted for sharing best practices, both internally and with benchmarking partners. TI also spreads knowledge through “sharing sessions” and by transferring employees to other parts of the company. The crew. Knowledge is embodied in people. It’s impossible to talk about knowledge without addressing the way people work together, learn together, and grow in knowledge individually and collectively. Companies that are serious about knowledge foster an environment and culture that support continuous learning.

Owens Corning has envisioned a future that requires a strategic focus for knowledge. Its new corporate headquarters represents that vision. In fact, knowledge sharing is a critical element of the new building’s design, which has the latest communication technologies and a multipurpose Discovery Center geared to self-improvement and business knowledge. Employees know they will be expected to become more self-directed in their learning.

A culture of knowledge can be encouraged in many ways. For example, in order to recruit top talent, Genentech lets its scientists publish their findings immediately in leading journals. In the past, the usual two-year delay made it impossible for the scientists to be first in their field, which is important for career recognition. Since the new policy, Genentech now ranks fourth among research institutions in molecular biology and genetics.

Successful knowledge sharing also requires being linked to a company’s reward system, such as Federal Express’s pay-for-knowledge program. At Ernst & Young, part of each consultant’s compensation is based on knowledge sharing activities. At Lotus Development, 25 percent of a customer-support worker’s performance evaluation is based on knowledge sharing.

Maps and guides. Knowledge-based organizations seek guides, maps, and pathways for building knowledge across multiple performance levels. They understand the processes that support the creation, acquisition, sharing, and renewal of knowledge. Companies that value knowledge want to know how and where to access it. Many companies, such as Chevron and Hughes Space & Communication, are undertaking knowledge mapping-guides to in-house experts. Other firms, such as McKinsey & Company, use Lotus Notes or databases to create knowledge sharing forums.

Common interest groups, called communities of practice by researchers Susan Stucky and Peter Henshel, demonstrate a shift from authority of position to authority of knowledge, according to Charles Savage in Fifth Generation Management.

Human resource professionals are shifting from the task of staffing to providing knowledge competency maps to replace traditional job descriptions. Training professionals are viewing curriculum design through a knowledge lens, creating programs with cognitive impact. Sound vessels. There must be vessels or vehicles to support knowledge exploration. They include

  • technology support (information systems, databases, communication technologies, Web technologies, and email)

One of the hottest technologies for knowledge sharing is a corporate intranet. U.S. West is connecting all 50,000 employees via its intranet to the company’s homepage. An independent study shows that Silicon

Graphics’s intranet significantly improved productivity, process efficiency, and workflow; enhanced knowledge capital; strengthened teamwork across boundaries; and increased employee satisfaction.

Computer technology can support self-directed learning. “Soft” technologies are also important, such as meeting spaces for shared learning and problem solving.

Feedback and measurement

There must be ways to assess whether you are on course. Measurements help gauge and manage knowledge assets, and support continuous improvement.

Mounting evidence shows that traditional accounting methods don’t capture the full value of an organization. Despite the challenges of measuring knowledge, companies are recognizing that it is their core asset. Dow Chemical has a six-step process for managing intellectual assets. Canadian Imperial Bank of Commerce measures three elements of intellectual capital: human capital, customer capital, and structural capital. Pacific Bell and Hewlett-Packard calculate value-added knowledge in products and services. Skandia developed a “knowledge scorecard” that measures learning and productivity.

Of course, no measurement is neutral. What we measure communicates our values and what we think is important. If we want to expand our knowledge, we have to understand how our values shape it, both personally and organizationally.

Knowledge typically emerges in response to our questions. Our thirst for knowledge has led us from the industrial age to the knowledge era and will take us beyond.

Core Competencies of Knowledge

One way to organize a company around knowledge is to develop a knowledge competencies approach. Many people use the terms capability and competency interchangeably. But core performance capabilities and core knowledge competencies are distinct, though complementary, aspects of organizational identity.

Core performance capabilities

They are the mechanisms by which core knowledge competencies are turned into products and services. Core performance capabilities are processes that enable a company to deliver high-quality products and services with speed, efficiency, and effective customer service. Core performance capabilities are key to a company’s success.

Such capabilities include

  • bringing new products to market quickly

Core knowledge competencies

They are the expertise and technical knowledge unique to a particular business. They are the content or subject matter, such as 3M’s technical knowledge about adhesives and Microsoft’s technological knowledge about software.

Each company has a unique organizational identity, based on how it combines its capabilities and competencies. Successful companies develop strengths in both areas. As a company adapts and changes, performance capabilities and knowledge competencies combine and recombine in new configurations that enable a flexible response to changing conditions.

With a competencies focus, employees are generally more empowered to meet customers’ needs. Employees organize themselves and their work groups to provide rapid responses and quality service. They’re often cross-trained or involved in job enrichment approaches that expand their range of skills. Competency-based companies tend to have a long-term perspective because competencies take time to develop. Such companies focus their investment and strategies more on strengthening competencies over time than on immediate financial gain.

All knowledge is not alike. Any area of expertise involves multiple layers of knowledge, such as those addressed in the new competencies model at Chase Manhattan Bank. As Chase became increasingly international, its market boundaries began to blur and new alliances increased competition. In response, it developed a customer-focused strategy and identified core competencies in each market segment to describe the skills and traits employees would need to deliver the new global strategy.

To support the competencies, Chase’s HR department defined the supply side of the equation by matching employees’ expertise with customers’ needs. The competencies became the standards for recruitment, performance, and career development. A database and information technology support Chase’s competencies focus. The shift has been from thinking of people as interchangeable workers filling static jobs to regarding each employee as having a unique bundle of competencies.

At the Canadian Imperial Bank of Commerce, a core competencies approach focuses on developing human capital. CIBC’s competency models describe about 50 knowledge and skill competencies employees need to provide value to customers. CIBC abolished training and the $30 million a year that went with it. Now, employees rely on their list of competencies to guide them. They have access to books and software in learning rooms, they learn from co-workers, and they can take courses as needed. Managers track their learning and competencies development.

As competencies become the new way of organizing knowledge, people are expected to develop a suite of skills rather than one or two. Xerox, for example, rates employees in information technologies on their business, technical, and leadership skills. When competencies are clearly defined, people can take charge of their own knowledge to better meet the needs of their most important customer-their company.

Where is the heartbeat of a network? A Living Systems Approach to Network Performance

Organizations are complex adaptive systems. People organize their work according to the pattern of life itself — the network. As social networks organizations and collaborations have many of the same characteristics of living systems. There have so many variables they operate more in the realm of probabilities than predictability. Behaviors are predictable according to certain patterns but not in specifics — and then only to a limited degree.

Value network modeling defines the basic pattern of organization as that of a network of contributing roles and their exchanges. Describing work this way allows a detailed description of the structure of any specific business activity or organization as a living network.

So if behaviors cannot be absolutely predicted, then what is a manager to do? How do we monitor the health and vitality of a value creating network in such a way that we can intervene before it gets out of balance?

The heart of the network

From a living systems perspective it doesn’t makes sense to to monitor every single interaction in a network. After all, when you visit your doctor they only check a few key indicators such as pulse and temperature and only do a deep dive into finer indicators where there are problems.

This is also a common sense approach to monitoring network performance. Think of the value network as a living system. What would be the indicators that tell us things are working well and the network is healthy? Our two favorite questions challenge people to find the “heartbeat” and the “pulse points.”

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Finding the “heart beat” and the “pulse points” in a value network

Where are the “pulse points” in the network — those key interactions that provide important clues about the health of the entire network?

It isn’t necessary to monitor every single interaction in a network. However, there are some interactions that are particularly critical to the overall health and vitality of the network. Surprisingly, people can readily identify two to four key “pulse points” even in very complex networks. Pulse points are places where monitoring performance is essential.

Is there is a “heartbeat” in this network?

  • What role(s) is most essential in the life of this network?

The heartbeat is not the same as the most connected or most powerful role in the network. The heartbeat is the role or roles that provide the most critical value in the network.

Sometimes the most important roles are simply overlooked. Either the role is taken for granted or it appears to be peripheral to the network, such as a champion or resource provider, or even an unnoticed administrative role. But if that particular role was not there or someone else took on that role the whole dynamic of the network could change in — well, in a heartbeat.

For more on this approach and the breakthrough business results it can bring see the online book Value Networks and the True Nature of Collaboration.

Presentations

  1. Turning Social Networks Into Business Results

Videos

1. Value Networks

2. What is a Value Network?

3. Business Process Networks

4. How to Become Qualified & Implement Value Network Analysis

5. Productivity Breakthrough with Value Networks

6. Integrating Value Networks into the Traditional Organization

7. Value Networks & Complex Reorganization

8. Value Networks

9. Converting Tacit Knowledge to Explicit

10. Incentivizing Knowledge Sharing

11. Social Network Analysis for Knowledge Management

12. Evolution of the KM Agenda

13. Knowledge Management for Small and Medium Size Businesses

14. Creating a Knowledge Management Scorecard

15. Connecting human interactions and business processes

16. Interview at KM Brasil

Books

1. Value Networks and the True Nature of Collaboration with Oliver Schwabe (online version)

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2. The Future of Knowledge: Increasing Prosperity Through Value Networks

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3. The Knowledge Evolution: Expanding Organizational Intelligence

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4. What is True Wealth & How Do We Create It edited with Dinesh Chandra

5. Learning Links: Enhancing Individual and Team Performance

6. Handbook of Knowledge Management Vol. 1 edited by Clyde Holsapple — Chapter 61: Evolving Business Forms for the Knowledge Economy

7. Next Generation Knowledge Management, Volume 2 — Chapter 7 Knowledge, networks and value creation

  • Process of knowledge and value creation

8. Inspired by Knowledge in Organisations: Essays in Honor of Professor Karl-Erik Sveiby on his 60th Birthday edited by Guy Ahonen — Chapter 5: The Very Human Dynamics of Knowledge and Value Conversion

9. Amazon Author Page

Written by

Knowledge Management Author and Speaker, Founder of SIKM Leaders Community, Community Evangelist, Knowledge Manager https://sites.google.com/site/stangarfield/

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