Business mentor: Mining staff know-how

Q. I have read about the so-called Knowledge Economy, but how can we get it to work in my small business?

My biggest problem is sharing the knowledge I have about what we do while retaining security of that knowledge. What I know is what someone will buy when I sell the business. A lot of what I know is intangible, or least I think it is.

I also have trouble with the age-old problem of training new staff. I hate to think what training new people really costs us, but they need certain knowledge to do their work.

A. Malcolm Dennis, managing director of Worklinx Systems, replies:

Intangible knowledge is the toughest sector of knowledge management in any business.

In fact, most businesses have not found a way to make the intangible knowledge tangible: it's just too big a challenge.

So where would you find the intangible knowledge in your business?

Well, as you've probably guessed already, the intangible knowledge is held in the minds of your staff. Intangible knowledge has been referred to as habits or routines. Habits can be described as the things you don't know you do.

Staff certainly know what they are doing. They do their work right, it gets results and without them doing those things, there would be serious problems in the business. But who knows what they do precisely? The best test, but sometimes a very expensive experience, is to find out what happens when particular staff are away.

Many business owners have discovered their intangible knowledge when a staff member calls in sick or is delayed back from a weekend or leave.

No one else knows how to do particular parts or all of their work. The intangible knowledge in their work has to be discovered and made tangible very quickly. People have to find out what and how the work gets done. You already know why it has to be done, the customer is waiting for action now!

Some business buyers like knowledge management, others don't.

Knowledge management adds value to a business.

In this situation, the knowledge of a business is called intellectual capital.

A good example is a person who buys a franchise. The major value in a franchise purchase is the intellectual capital value of the business system. The business system is usually a proven way to make money.

Buyers who want a bargain business look for poorly run enterprises where knowledge management doesn't exist so there's no consideration for intellectual capital in business systems.

Of course there are associated risks in buying a business where knowledge has not been documented, but other values - such as undervalued assets - may be appealing.

Gold is waiting to be mined in all businesses.

Implementing a sound knowledge management system in your business, including capturing the important intangible knowledge, will put a serious value on the intellectual capital of your business.

This means all businesses without comprehensive knowledge management can greatly increase the value of their asset register by implementing such a programme.

This brings new meaning to succession planning.

Far too many succession-planning programmes ignore this aspect of business value.

Too much focus is placed on other capital and asset values while neglecting the one key area of a business that makes the sales process and new owner transition more seamless.

An existing owner can quickly demonstrate how the business systems will operate, regardless of ownership. The knowledge management systems will ensure this happens.