Measuring Knowledge Management Capabilities

As business professionals know, creating awareness of a problem and its impact is a critical first step toward the resolution of the problem. That which does not get measured, does not get managed (Redman, 1998). In fact, measurement is a precursor to improvement. This is true for knowledge management (KM) capabilities of an organization. “In today’s knowledge-based economy,” Alan Greenspan recently said, “70% of organizational assets are knowledge assets.” Knowledge assets are intangible capabilities, and there is a recognized need to “make a greater effort to quantify the value of such intangible assets” (Teece, 1998b). How does one measure the worth of an organization’s knowledge assets? What does one mean by knowledge assets anyway? In this article, we afford some formal structure to the idea of measuring knowledge management capabilities of an organization, with the ultimate goal of improving business performance through better management of knowledge assets. We describe a large-scale effort at Intel to assess such capabilities with a view to enhance them. This project started in May of 2002. We describe the different types of knowledge assets identified, the potential capabilities associated with managing knowledge assets, the metrics devised for their measurement, and the assessment methodology that is being standardized across the corporation. We also provide results of the initial validation of the instrument and its ability to ascertain KM capabilities correctly. Hundreds of knowledge workers (Davenport, 2003) have so far participated in this study to benchmark KM capabilities of their units. Some units are already planning the next steps for improving their KM capabilities.