Bridgeland and Zahavi on Business Modeling

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.

I have just returned from Braintrust, a knowledge management focused event. I was there to speak about business modeling and how it relates to knowledge management. Knowledge management used to be about capturing existing information such as documents and presentations, converting them to a digital format if needed, and then storing them in a database, indexing them and making them available for others to search.

Over time knowledge management evolved also to be about how to capture tacit knowledge, the knowledge in people’s heads, and converting it to explicit knowledge, such as that found in documents. Many companies and organizations today are extremely concerned about their aging workforce – about the tacit knowledge that this workforce possess and that is about to walk out the door. The “great crew change” is the term given to this issue surrounding the retirement of the baby boomers and the need to train a new generation on what they know. Much of this baby boomer knowledge is tacit, not captured today in documents, and not easily captured in document form.

Today knowledge management is much more than capturing and storing knowledge so that others can use it. Today knowledge management is also about identifying where the knowledge exists and who might have it, it is about collecting and capturing the knowledge, it is about the creation of communities of interest and social networks, and it is about using web 2.0 and enterprise 2.0 technologies to harness the power of the knowledge and making it easier to find and use it.

Many organizations today have some form of a knowledge management program. The program may be a formalized set of processes and technologies used to rollout the knowledge management capability, or it may be based on a more viral grass roots movement to get employees to share their knowledge and network with other employees. Most organizations today still have rather basic knowledge management programs that are divided into two steps. First knowledge is captured, put in the repository, and indexed so it can be found. Later, in a new situation, the knowledge is found. At that point it can be reused. The same knowledge that was used before—on the original project or activity when it was captured—is used again in the new situation.

While organizations today have methods and tools to store the knowledge and find it, they are still struggling with the best way to capture that knowledge. Should it be done by asking the retiring workforce to write down what they know? Should it be done by interviewing them? Should it be done by having the new younger workforce “shadow” or work side-by-side with the retiring employees to learn what they know? And how can we tell what information is correct, what is a lessons learned that should be repeated and what is one that should be avoided? Just because someone has performed a job a certain way for years does not necessarily mean it is the best or safest way to perform it today or in the future.

Why use business models for assisting in the capture step? We have found that business models are an excellent way for capturing tacit knowledge. The workshop methods we discuss in our book are also an excellent process that can be used to capture such knowledge and models. The workshop format allows the people possessing the knowledge (such as the baby boomers) and those that require it (such as new employees) to interact. Together they create the models, pose and answer questions, agree on common terminology and representation, and feel ownership of the models they create. Building models is also much more interactive and visual than creating textual documents and therefore more interesting.

Unlike standard documents that are static, business models are created in tools and can be maintained as a “live” artifact over time. Business process models and business rule models can also be simulated and executed, so the knowledge is not just stored until it is reused, but the knowledge can actually be tested and deployed in real systems.

Business models are easier to reuse than other kinds of documents typically found in a knowledge management repository. If the new situation is sufficiently similar to the original project, the model can be used without changes. If the new situation is only somewhat similar, the model may be changed to fit. For example, a company may capture business models surrounding the deployment of a contract management system for one of their pharmaceutical manufacturing clients. They can capture the goals for the system; they can capture organization models showing how the contract department interacts with internal departments and with pharmaceutical wholesalers and buyers. They can capture process and rule models that are involved in these interactions and in contract solicitations, bidding, award and management. When the project opportunity arises to sell and install a system for a medical and surgical supplies manufacturer (instead of a drug manufacturer), the types of products need to be changed, and rules associated with the different type of business might change, but much of the way the contracts are issued and managed is similar and can be reused.

In addition to supporting reuse within an organization, business models can also promote reuse across organizations. For example, in information technology support, the IT Information Library (ITIL) standard defines some best practice processes that can be used in many organizations for functions such as configuration management, help desk support, incident management, and availability management. These processes help ensure that needed IT is correctly configured, supported, and available. A business model based on ITIL defines business processes useful for any IT department, in any company or public sector agency. The models are based on knowledge representing best practices harvested from many experts.

In our next knowledge management related entry we will discuss how business models can be used not only to capture knowledge, but also to create new knowledge.