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June 22, 2005

Managing the Productivity of Knowledge Work

Co-founded by a group of organizations including Accenture, Microsoft and Xerox, the Information Work Productivity Council drives a sustained collaboration intended to build a framework that measures productivity in "the information-centric business environment of the 21st century."

Early research released from the Council stresses the importance of some evolving ideas for understanding productivity in "information work and knowledge work" through a combination of lessons learned from manufacturing and I.T.

However, Accenture's Institute for High Performance Business emphasizes that a definitive reference model for measuring this productivity is still not on the horizon. And the IWPC itself states, "Although recent surges in productivity have been attributed to the use of IT, we still have no effective way of measuring or verifying its impact on information work."

In no small part, according to Accenture, this is due to ongoing debate about what to include in the kind of work being scrutinized for productivity, even including a sense that the popularity of the term "knowledge worker" might be missing the point by arbitrarily discouraging attention to equally important issues of information-based productivity.

But while Accenture makes those comments with a view on the internal needs of a given single business organization, I think it is absolutely necessary to step beyond that and propose that the "industrial" landscape of 2005, compared to the landscape of 1985 or 1965, quite loudly demonstrates increased "productivity" in the form of 2005's awesome diversity of types of viable business attributable in the main to business IT adopted in the last few decades. Proposed more simply, IT productivity really manifests itself at the market level moreso than at the enterprise level. Likewise, "knowledge productivity" manifests itself at a higher level than operations, in the form of a sustainable diversity of fully viable business capabilities. Discuss...

The intensity of the "productivity" investigation is certainly not at all in doubt, but the majority focus is on a somewhat different point, as both executives and academics are going "all out" to credibly factor the business reliance on information work (including knowledge) into the equation for business value and business valuation. That effort (and accompanying debate) would account for how knowledge work affects the conventionally measured productivity of a business's company.

Nothing strikes me as more certain to inhibit the effort as would a failure to unravel semantic confusions that inspire solving the wrong problem. Credit IWPC for stepping on that same stone, but in my view what follows from that point is a brief sprint down a course of resolution different from IWPC's -- not to a necessarily different or further endpoint, but in an alternate direction at least for the time being. My premise: there should be a view of the productivity of the actual work itself, providing a precedent baseline logic establishing why and when the work contributes to the productivity of its consumers and beneficiaries. In particular, I'll focus on knowledge.

1.

To begin, let's presuppose the reason behind our certainty about the criticality of knowledge in the modern business.

The fundamental operational issue for the business is to maximize opportunity at minimal risk, and to convert the opportunity into necessary benefit at minimal cost.

Correspondingly, utilization of knowledge is needed to, and proven to, impact opportunity in three essential ways:
- accelerate its development;
- differentiate it; and
- secure it.

Meanwhile, utilization of knowledge enhances the foresight and awareness of risks and costs pertinent to the opportunity.

The elaborations of that utilization are seemingly infinite, if accounted for by the organizational variations of one company to the next. However, the principles for the utilization do not change from one company to another, which means that there is a common reference regardless of the commonality of practices.

2.

The next presupposition, however, is the most critical one to my direction -- namely, that the term "knowledge worker" is NOT a synonym for "information processor".

IWPC's namesake distinction of information from knowledge is an important precedent for including "information work" beyond "knowledge work", signalling the belief that really meaningful talk about productivity requires an expanded field of terms. But a more fundamentally important observation to make is that "processing" is work, and that knowledge workers are process managers.

The key question is, what processes do knowledge workers characteristically manage? What's necessary here is to answer the question the right way, assessing the activity being conducted instead of the department (e.g., marketing or finance) commissioning the work. And this activity can be assessed in terms of knowledge, without the expansion into "information work", as follows.

This next short list highlights the distinction that is most relevant to the business issue of knowledge work productivity. These processes have outputs, and the business challenge is first to understand the significance of the outputs and second to understand the practical options for optimizing the generative processes:

(1) Strategics: a term coined here as a placeholder, this is mainly the interpretation of projected conditions with the goal of modeling their relationship to objectives.

(2) Heuristics: this is the use of a hypothesis as an instrument of iterative examination.

(3) Diagnostics: this creates and applies systems of identification and classification to distinguish the constituent elements of conditions and entities.

(4) Forensics: this discovers and determines items as relevant elements of a proposition that is a candidate "fact".

Then, the important consideration is the matter of how those activities are proceduralized, such that their respective underlying methodologies become portable to other workers. Logically, this is one of the responsibilities of the individual knowledge worker: initially adapting the activity's methodology to the real environment for operations. This adaptation is the basis of the activity's effectiveness. But the adaptation can also be assisted and formalized, to increase the efficiency of applying the methodology by the given worker. Any external assistance can be considered an "input" to the management of the processes.

Here, another distinguishing point emerges regarding direct measurement of knowledge work's productivity. The person identified as a "knowledge worker" could be evaluated as a "resource cost" -- but that type of evaluation is likely arbitrary without comparative benchmarks that describe the same activities and assists applied to substantially similar circumstances. In effect, the "resource cost" view presents the "knowledge worker" as a kind of function, for which availability and quality are actually the key measurable characteristics. But in that case the productivity issue derives from the management of the worker, not from the worker's own effort. We still want to understand the worker's effort itself.

3.

What really matters to business improvement is the impacts of the knowledge processes. For example, there are two basic categories of significance holding four types of results that should be treated as target business outcomes of the knowledge work:
- (impacts related to liabilities) risk mitigation and lower opportunity cost
- (impacts related to benefit) quality certification and innovation

As the source of these impacts, the knowledge processes managed by the worker thus protect and expand the business's measurable ability to affordably create and capitalize on opportunity. This means that, when successful, they produce a new "resource" of greater value than the business's ingoing investment in acquiring, deploying and maintaining the knowledge worker as a resource. That defacto statement of ROI addresses the motivation behind executive attention to the improvement of knowledge work.

Posted by Malcolm Ryder at June 22, 2005 9:33 PM

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