In the last entry on business modeling and knowledge management we discussed the use of business models for capturing knowledge and reuse. Instead of simply capturing knowledge in documents, storing them and indexing them so that they can be located and searched, business models allow us to capture knowledge and provide the flexibility to modify it.

Business models also allow us to capture knowledge as it is created. For example, an executive team can create the company’s strategy at an offsite. They create the company’s mission statement, its goals and, decide on some critical initiatives to achieve those goals. They may also decide to move forward on a much needed reorganization to align with the new goals.

Today such knowledge is often captured in PowerPoint slides. This knowledge, however, can also be captured in models – in business motivation models and business organization models. Maintaining goals, organizational structure, initiatives, and other similar artifacts is very difficult in PowerPoint. In practice PowerPoint slides are often static and do not get updated regularly. It is very difficult to change elements on each separate slide and to ensure they are still in-synch. Models are much easier to maintain over time. Modeling tools allow us to modify model elements when needed, and when you modify a model element in one model it changes in other models that use it or reference it.

But creating business models accomplishes more than just capturing existing knowledge. Capturing the knowledge in business models can also expose something that might be hidden or otherwise missing. We might discover that we are missing an initiative to support a particular goal. We might also discover that we have initiatives that do not support any of our new goals and that might not be needed.

Ultimately business models are most useful in creating new knowledge – something that cannot be achieved by simply capturing knowledge and storing it in a knowledge management repository. When you capture an as-is business model and then modify it to generate possible to-be models, you are creating new information, new knowledge that might represent the actual future state of the organization. You can compare and evaluate alternatives and select the best one. You have just created something new, something that was not there before, but something based on that existing knowledge. You have created new knowledge that can be used in the future.