A common and recurrent theme that I keep coming across is how to measure the value of knowledge management, e.g. the return on investment (ROI) of implementing a knowledge management strategy. This may cross over into having a social media strategy where the goal is to support knowledge sharing, so I’ll use these terms – KM Strategy and social media strategy interchangeably in this particular context.

I don’t doubt the importance of being able to measure results and it’s the job of managers to ensure they get value out of any investment in training, technology, organisational development or whatever.  However, these things are notoriously difficult to measure – for example – how do you put a price on a conversation? This led to me thinking about turning all of this on its head and considering how we should measure the cost of NOT having a knowledge management or social media strategy, or NOT making any change.

Using this approach we can at least examine the current status quo and determine whether business processes, capacity, staff knowledge etc. are fit for purpose.  So, rather than spending time and effort creating a business case for a KM or SM strategy, ask managers to justify why things should stay as they are.

Some pertinent questions for managers might be:

Is your staff currently motivated and inspired?

Do your staff have all the relevant information to do their jobs effectively?

Do your staff have the right tools for the work they are being asked to do?

Do your staff understand their place in the wider organisation and their input and output dependencies for the business processes they contribute to?

Do your staff have adequate opportunities to share knowledge and information with other parts of the organisation? Are they encouraged to do so?

Are you confident that you can react to rapidly changing demands on your staff?

Do you have sufficient knowledge and information to consider the impact of external events on you and your staff and to plan accordingly?

Do you know what your customers are saying about you (within and external to your organisation)?

Do current policies and guidelines support or hinder you and your staff in their work?

Does your manager fully understand what you and your staff do?

There are probably other questions that could be asked, but the key point is that any question which triggers a negative response is potentially a catalyst for change.  This also means it could become a performance indicator if change is agreed, i.e. using qualitative or quantitative techniques.

So, we have the beginnings of a measurable approach to change; we know where we are now and we should know what the desired outcomes are. The difference is what we need to measure.

Of course, the problem remains that not all changes can be measured in strictly cash value terms, which is what many people consider to be the true meaning of ROI. I go back to the point I made earlier – how do you measure the value of a conversation or some information shared?  The answer is, you don’t, and the sooner that everyone recognises this the better. Measuring impact can be just as important as measuring value.  The impact might be things like improved customer satisfaction (measured using surveys), or less time to complete a task, or improved staff morale (measured using surveys). Any of these can – and potentially will – have an effect in terms of cash value to the organisation, but I firmly believe that converting impact to cash value is an exercise in futility, since more often than not, the formulae and algorithms have too many variables.

So, in terms of ‘ROI’, think ‘Return on Impact’ rather than Return on Investment when considering Knowledge management strategies, and develop the strategy from the starting point of getting staff to justify the present  status quo.  After all, change is part of life, and as Darwin once said:

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

There has been much written about measuring the value of online communities such as Social Networks or Communities of Practice.  However, most pundits tend to think of measuring value from a purely financial perspective, i.e. the Return on Investment (ROI).  Clearly this is an important factor, but it’s not the only factor that should be considered. Surprisingly few organisations consider the value that is being created by having better informed and more knowledgeable staff, or the potential value of getting closer to customers and local communities. These latter factors are quite difficult to measure in terms of ROI, and will normally take more than one business cycle (e.g. a financial year) before any meaningful financial measures can be made. Unfortunately – and especially in today’s financial climate – organisations plan around 1 or 2 year business years, whereas online communities will not usually be time-limited, and very rarely be driven by finance and budgets. Allowing for the relatively small cost of bandwidth and technology, conversations are – for the most part – deemed to be free.

I was pleased to see that Matt Rhodes over at Freshnetworks did refer to non-financial ROI, though I would have liked to have seen more emphasis on the value that is generated for the members of these online communities, rather than the usual social media impact measures (numbers of page hits, numbers of conversations etc.) – important as these are, and adequately illustrated in the accompanying presentation.

I have taken a slightly different approach to the issue of how the value of online communities is measured, giving more emphasis to the discovery of value rather than the dispassionate assembly of a series of metrics – financial or otherwise. I should also add that the perspective is on public sector communities since this is where I’ve been primarily engaged over the past few years. The main points are covered in a presentation I gave to the Public Health Information Network Conference earlier this year and reproduced below:

1. We need to distinguish between cost and value.

I used the humble nutmeg to illustrate this point. Weight for weight more valuable than gold in 17th century Europe. The spice was held to have powerful medicinal properties. It rocketed in price when physicians in Elizabethan London claimed that their nutmeg pomanders were the only certain cure for the plague. So, cost was very high, but the value? Well, despite the assertions of the medical experts of the day, it certainly didn’t cure the plague!

The point is reinforced by the following quotations:

I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.
Benjamin Franklin 1706-1790.

A cynic is a man who knows the price of everything but the value of nothing.

Oscar Wilde 1854 – 1900.

2.  We are more likely to find and create value from the communities we choose for ourselves than the communities we are compelled to join.

I have argued that one of the key characteristics of a Community of Practice is the fact that the members are self-selected, i.e. they are there because they want to be there and not because they have to be there. They may select to become members because they share the same interests, passions and goals as the other members. A successful CoP will create value for the members – either collectively in terms of working towards a common goal or objective, or personally, e.g. through self-development or sharing knowledge.

3. We are re-discovering networks and communities and through them, re-learning how to have conversations.

It’s sad fact that 20^th century working practices and pressures of modern life have led to a sense of personal isolation. Mass production, prescriptive and repetitive tasks and limited social opportunities in the workplace have created a workforce conditioned to think and act as a corporate entity, limiting individual aspirations and creative thought.  The opportunities for sharing information and knowledge have been gradually eroded over the past 50 years; social clubs have closed; people don’t have the time (or money) to regularly socialise after work; we are increasingly driven by task-oriented emails.

What is sometimes forgotten is that professional communities, where good and notable practice is shared amongst fellow artisans, are still flourishing today in the form of Worshipful Companies (over 800 in London alone), with most having existed for many hundreds of years. Communities of Practice are not new; they’ve just discovered they can exist in a virtual world. The key issue for many people though, is learning how to have on-line conversations.  The following points from one of the slides are worth re-iterating:

• We don’t know what we don’t know
• People don’t learn from content – they learn from other people.
• We don’t know the value of knowledge until it is shared
• We need to find where the conversations are happening….and join in!

And…

Dialogue is NOT:

• Discussion, deliberation, negotiation
• Committee, team, task or working group
• Majority wins, minority dominance, groupthink

Dialogue IS:

• Free-flowing exchange of ideas among equals
• All ideas are solicited and are considered
• Best ideas rise to the top

4. ROI doesn’t just mean ‘Return on Investment’

I’ve taken the liberty of using something I once heard Euan Semple say: “Keep the I small and the R will look after itself”. I think this is a good mantra because anyone worth their salt in the Social Media/Social Web world knows that implementing a social media strategy doesn’t have to cost a fortune. The days of multi-million pound corporate websites is fast diminishing, and anyone with this amount of money to spend is going to be quite rightly questioned on ROI – and they better make sure they have the answers.

I’ve given some alternative definitions for ROI, such as:

• Return on Influence
• Return on Interaction
• Return on Impact

These are the things which should be measured for value, and add a different dimension to the traditional financial measures.

5. Recognise that value to the organisation is different from value to the individual.

There is an over-emphasis on measuring value of online communities from the organisational perspective. I’ve given a (financial) example in the slides, using cost savings of online conferences as an example.  However, it is important to remember that there is also a value to the individual in being a member of an online community, and this aspect often goes unrecognised (and unmeasured). The value or benefit to a community member is quite difficult to measure (the member may not be able to articulate or recognise what knowledge they have gained from the community) and any outcomes may not be easily aligned with corporate goals (e.g. job satisfaction). It is nevertheless important to consider this dimension in any overall value measurement. Qualitative metrics can provide some answers, but it’s also useful to examine quantitative data to gain a better understanding of the community itself, e.g.:

• Number of community members
• Number of contributions
• Number of contributors
• Number of inactive users

Having a Social Network Analysis (SNA) application is even better, since this can reveal who the key ‘nodes’ are in the community chatter. It’s a useful discipline to consider what would happen to the online community if these community members decided to leave the community. Dependency on one or two ‘power’ contributors should be recognised as a risk.

The presentation concludes with a number of lessons learnt from the IDeA CoP platform , which has now been active (and by all measures, successful) for over 3 years. It’s always useful to have a distilled list of “do’s” and “don’ts”, herewith reproduced:

Do…

• ..identify and look after your facilitators – they are quite often the difference between successful and unsuccessful communities
• ..let users drive their own experimentation and use of tools.
• ..target and support areas that have a clear desire and need.
• ..build trust and relationships face to face where possible.
• ..condition your managers for failure – not every CoP is going to be successful.
• ..use online conferences and ‘Hot Seats’ to build membership growth and encourage conversations.

Don’t…

• ..think you can force people to collaborate
• ..assume everyone understands how to use  Web2.0/social media tools.
• ..assume everyone knows how to contribute.
• ..worry about the ‘lurkers’.
• ..let command, control or hierarchy hamper or kill your community
• ..set unrealistic targets

I hope this has been helpful to anyone involved with social networks or communities of practice, and particularly those who need to show that their online communities are delivering value. Just remember there is more to ROI than finance!

I am very pleased to have been invited to speak at the Public Health Information Network (PHIN) conference in Atlanta, Georgia, taking place between 30th August and 3rd September. This will be my second visit to Atlanta, having been there in May this year to meet with staff at the Centre for Disease Control (CDC) to share knowledge about the UK local government Communities of Practice, a strategy I developed for the Improvement and Development Agency (IDeA) in 2005 and which continues to thrive with over 35,000 users at the last count.

PHIN/CDC are in the process of developing collaboration tools to support geographically dispersed professionals working in the field of public health informatics, and Communities of Practice (CoPs) are a key part of this strategy.  This is the primary reason I’ve been asked to attend, and I’ll be talking about the lessons we’ve learnt in developing the CoP Platform for local government. The focus of my presentation will be on the issues around measuring value of social networks and Communities of Practice. I think this will fit in quite well with the goals and objectives of the conference, repeated here:

Goal
To build a public health informatics community through the sharing of promising practices and lessons learned.

Objectives

• Extend the reach of innovative public health informatics practices.
• Summarize current issues and trends in the field of public health informatics.
• Translate issues and opportunities in public health informatics and health information technology for public health practitioners and policy makers.
• Facilitate the development of a community focused on accelerating the field of public health informatics.
• Validate public health informatics activities at national, state and local levels through open source collaboration and community building.
• Integrate knowledge gained to leverage resources for sustainability of information technology, workforce development, and human capital.

A full programme of the conference is available online if anyone is interested. I’m speaking on the last day of the main conference, Wednesday 2nd September. I will make my slides available on Slideshare after the conference, and (access to Internet permitting) will provide regular Tweets on any the issues.