The knowledge entrepreneur: Exploiting know-how to create new income streams and transform practice performance

Professor Colin Coulson-Thomas, author of The Knowledge Entrepreneur, believes that many partners are missing opportunities to transform practice performance by using a new generation of job-support tools to increase understanding, build relationships with customers and clients, and boost productivity. In this article, he particularly argues that firms could make more of the unprecedented possibilities for generating additional revenues from new knowledge-based offerings.

Research by the Centre for Competitiveness at the University of Luton has revealed a growing gap between latent possibilities and what is being achieved. Evidence has been collected from some 2,000 companies and 500 professional firms, ranging from accounting and legal practices, advertising agencies, marketing and PR specialists to management, IT and engineering consultants. Areas researched include competitive bidding, building customer relationships and creating and exploiting know-how.

The studies ranked the performance of those surveyed according to their achievements in the areas under examination. Comparing the most and least successful firms enabled critical success factors to be identified for the activities being investigated. Twenty reports and a dozen books summarising the key findings and providing guidance for practitioners have been produced (see www.ntwkfirm.com).

The findings are sobering. For example, the team producing the report Managing Intellectual Capital to Grow Shareholder Value (Policy Publications, 2000) found that none of the organisations surveyed effectively exploited more than a handful of the 20 categories of intellectual property examined. Perversely, in most companies, the application of effort appeared inversely related to the extent of the success.

While scientific breakthroughs, innovative thinking, new approaches and creative solutions are overlooked, people drown in irrelevant information. Organisations waste time and money on ‘knowledge management’ initiatives to capture and share existing know-how that may or may not be relevant to future aspirations. While highly exploitable know-how is ignored, information already captured electronically is dumped onto corporate intranets.

Far too many boardrooms are like chapels of rest. While unexploited intellectual capital lies all around, directors and partners simply imitate and copy their competitors. Firms adopt managerial rather than entrepreneurial approaches. The focus is upon managing what is currently known, rather than creating new information and knowledge-based services, tools, ventures and businesses.

Yet recent research and the experience of pioneers who have introduced better ways of supporting professionals and other knowledge workers suggest we stand at the threshold of a new management revolution. There is simply enormous potential for knowledge entrepreneurship, performance improvement and developing the additional knowledge needed to deliver greater client value and improve practice profitability.

We need to step up from information management to knowledge entrepreneurship. There is an urgent requirement for knowledge entrepreneurs who know how to acquire, develop, package, share, manage and exploit information, knowledge and understanding, and introduce related job-support tools.

There are a rich variety of opportunities to boost practice revenues. Many practices could offer up to two dozen additional categories of professional service based upon a combination of internal expertise and/or publicly available information. Premium rates could be charged for bespoke versions of most these offerings.

The effectiveness of many existing activities can also be transformed. Practical support tools incorporating critical success factors for competing and winning promise dramatic improvements in both understanding and achievement. The experiences of organisations as varied as Avaya, B&Q, Cisco, Dana, Eyretel and Friends Provident suggest they represent the next ‘big idea’ in management.

These pioneers have used knowledge-based support tools that help people to be more effective at their jobs. Results achieved range from transforming how professionals work and increasing business-win rates, to launching new products and building supply-chain quality. Controls can be built into tools to enable greater delegation and more bespoke responses in complex and regulated areas.

Within many communities of professionals there are a small number of superstars and a larger number of competent but not very good practitioners. Using a support tool to capture the approaches of high performers, will make it easier for colleagues to do their jobs and greatly improve the performance of repetitive and more routine tasks. Time freed up can be used to consider more complex problems, add value and differentiate and tailor professional responses.

Within professional practices and work groups, knowledge-based support tools can be used to communicate capabilities, identify customer requirements and develop ‘solutions’. Capturing and structuring information about a client’s situation and needs, and identifying when and where a particular expert’s advice is required can reduce non-chargeable or low-cost investigation work and increase the utilisation rate of specialist staff.

In relation to winning business, returns of over 20 times an initial investment have been quickly achieved by support tools that capture and address requirements, prepare and price possible solutions and prepare proposals. In addition to higher success rates, orders have been brought forward and dramatic reductions have been made in the number of specialist support staff required to attend sales meetings in the field.

Overall, within most professional firms much greater effort needs to be devoted to knowledge creation and exploitation. Successful approaches need to be captured in the form of methodologies and tools that can be used by colleagues and/or licensed to clients and other organisations.

Large practices should also consider setting up some form of independent corporate learning and/or enterprise centre with a specific knowledge-creation brief. Too often, training and development activities circulate what is already known and do not result in intellectual-capital outputs.

Directors, boards and managing partners should assess the scope for knowledge entrepreneurship within their firms. They should consider steps they might take to create and enable a community of knowledge entrepreneurs and stimulate and launch new knowledge-based ventures. The following are among the questions that could be asked by a managing partner, or an ambitious professional considering whether or not to join a particular firm or acquire a partnership in a professional practice:

Is the firm operating in a sector or area of practice in which information, knowledge and understanding account for a significant and/or increasing proportion of the value being generated for customers and clients?

Does the board or management committee of the firm understand the extent to which future prospects depend upon how effective it is at accessing, developing, sharing and exploiting information, knowledge and understanding?
To what extent is the firm and its professional staff a consumer or a producer of information, knowledge and understanding? What is the value of knowledge that the firm has bought in as compared to that created in-house? Is the proportion rising or falling?
Is the firm making a distinctive contribution to what is generally known or practiced? What would the profession and/or world at large lose if it ceased to exist?
Is there an explicit knowledge creation and exploitation policy and strategy? Have specific goals and objectives been set relating to the acquisition, development, sharing and exploitation of information, knowledge and understanding?
Who among the senior partners or membership of the board has specific responsibility for the acquisition, development, sharing and exploitation of information, knowledge and understanding? Is progress in these areas monitored and reported?
Within its particular field of professional practice or market sector, is the firm a ‘leader’ or ‘follower’ in relation to innovation and ‘best practice’? Does it explore, discover and pioneer new approaches, offerings and ways of working?
Does the firm have a reputation for innovation, knowledge creation and exploitation? How effective is it at recruiting and retaining creative and entrepreneurial professionals and other staff? Are they equipped with appropriate job-support tools?
Is the firm aware of how major competitors, potential new market entrants and leaders in other professions and sectors acquire, develop, share and exploit information, knowledge and understanding? Does it monitor their experience and learn from them?
Does the firm attract, encourage and successfully manage approaches from potential business partners with ideas for exploiting its know-how, creating new offerings and establishing new knowledge-based ventures?
What arrangements are in place to encourage and support the entrepreneurial interests and endeavours of employees? Are they encouraged to come forward with commercial ideas and proposals?
Is the firm a member of relevant learning consortia and partnerships? Is it plugged into critical information and knowledge flows, or excluded from them?
Are the ‘knowledge content’ and competitiveness of the firm’s offerings and services rising or falling in comparison with those in other professional practices? Is it climbing up or sliding down the value chain?
Does the firm possess the critical mass of know-how and professional superstars it needs to remain a player within its market, or become a global leader within its profession or sector?
In particular, is the superior expertise of professional superstars being captured in a form that enables it to be used by less competent colleagues?
Is the firm able to attract and retain the brightest and the best customers and clients, or are key accounts and demanding users of its services being lost to competitor organisations?
Is there a central repository of knowledge and intellectual capital? Is this managed? Can it handle know-how in a variety of formats from electronic data to visual images and audio and video material?
Are there particular categories of knowledge assets that are not being sufficiently exploited?
What measures or indicators does the firm employ to assess the extent of innovation and learning that is occurring at individual, practice, group and corporate levels, as well as knowledge creation, capture, sharing and exploitation?
Does the firm put a financial value upon its know-how? Does it report on the extent to which it is adding to its intellectual capital?
What income does it derive from licensing its approaches, methodologies and tools? Are the resulting revenues falling, static or rising?
In relation to creating and exploiting information, knowledge and understanding, is the firm relying upon its past heritage and living for today or is it still vital and vibrant and actively preparing for tomorrow? Does it intend to shape the future?
Overall, does the firm have what it takes to survive and thrive in the information age? In particular, are the motivations, processes and technologies in place to support the acquisition, development, sharing and exploitation of information, knowledge and understanding?

Individual directors and partners should be role models when learning and sharing information, knowledge and understanding. A board or management committee should understand the key requirements for a successful professional practice in the knowledge society.

Many boardroom discussions would be enlightened by the presence of one or more knowledge entrepreneurs. The extent to which the enormous potential of stored information and knowledge is realised, and additional revenues are generated, depends upon the energy and imagination of people whose calling and practice is the acquisition, development and commercial exploitation of information, knowledge and understanding.

The knowledge entrepreneur needs to understand how to:

Acquire, develop, package, share, manage and exploit information, knowledge and understanding, and related support tools;
Help and enable others to effectively use and apply them;
Communicate and share information and complex knowledge in ways that assist comprehension and increase understanding;
Create, badge, protect, manage and exploit intellectual capital and best-practice based, job-support tools;
Identify and exploit market opportunities for distinctive information and knowledge-based products and services;
Develop and launch new information and knowledge-based offerings and services;
Use combinations of emerging technologies to network people, organisations and relevant sources of information, knowledge and support tools together;
Handle knowledge in multiple formats, including animation, audio and video material;
Develop and use appropriate job-support tools to increase individual and work-group productivity and corporate or practice performance;
Collaborate with others, and work and learn in new ways to create and deliver greater value;
Lead and manage knowledge workers, network organisations and virtual teams.

Some knowledge entrepreneurs are instinctive or born. Others possess specialist expertise, or know about particular technologies. However, an overview appreciation of how particular combinations of people, know-how and technology can be brought together and beneficially managed, while understanding how to establish, launch and manage a knowledge-based business is rare. It needs to become more common if we are to grasp opportunities to transform many aspects of our lives.

Many professional firms operate in fields or sectors in which know-how accounts for an increasing proportion of the value being generated for end customers. Yet they lack an explicit strategy for obtaining, developing, sharing and exploiting know-how. Corporate culture, policies, processes and practices should all be supportive of knowledge entrepreneurship.

A designated senior partner or person at board level should be made personally accountable for corporate effectiveness at acquiring, creating, sharing and exploiting knowledge. Specific opportunities for generating incremental revenues need to be assessed and important workgroups within a practice equipped with the support tools they need to do their jobs and achieve their objectives.

Just providing people with relevant knowledge may not be sufficient. They may also require tools to help them use and apply it when addressing the problems of particular clients. Practical knowledge-based tools can transform work-group productivity by increasing understanding, communicating best practice and sharing the essence of how superstars operate.

Reference:

Coulson-Thomas, C., The Knowledge Entrepreneur, Kogan Page, 2003.

Prof. Colin Coulson-Thomas advises on practice development and knowledge exploitation. He can be contacted at colinct@tiscali.co.uk