In Making a Market in Knowledge (The McKinsey Quarterly, 2004 Number 3), author Lowell L. Bryan suggests that for KM to succeed, organizations must create an internal marketplace. The framework proposed is interesting but ultimately, not that useful I think. 

Bryan begins by noting that specialized knowledge can create competitive advantage but that it is very hard to share in large organizations. Companies have tried several KM approaches, none of which have achieved great success. The key problem he notes is that the workers with the most valuable know-how “will be unlikely to exchange their knowledge without a fair return for the time and energy they expend in putting it into a form in which it can be exchanged.” Bryan suggests that companies can create an internal market place that will motivate the knowledge holders to share.

The user (or “buyer”) of knowledge will only use the know-how if it is easy to use and understandable. So suppliers (meaning experts or authors) must be motivated to produce useful documents with sufficient contextual information. The motivation is to increase reputation and visibility. To ensure this requires adequate recognition, pay, or promotion as well as ensuring that credit is not stolen. Bryan argues that with the right structures in place, “competition among authors for recognition” will keep the knowledge banks supplied.

The right structure is not trivial to create. It includes standard formats for knowledge objects, a taxonomy, adding contextual information, and a knowledge review process. This is in turn requires “facilitators.” Bryan suggests that a large investment bank would need about two dozen (I wish he had expressed this as a ratio). “The alternative—relying upon authors and knowledge seekers to follow protocols and standards and to regulate themselves—simply does not work: they lack the familiarity, the interest, or the time.” Also necessary are “knowledge domain owners,” who are senior executives for particular business units.

I have to say I find the article interesting but disappointing. To me, it seems to take some of the issues with which KM professionals have long struggled and with the voodoo of marketplaces, make it all seem simple. Don’t get me wrong, I am a big believer in markets (for example, two of my articles A Marketplace Trial and Federalism & Foundations, rely on market-based arguments).

The problem is that Bryan does not really explain how the market would work in sufficient detail. Assuring adequate recognition, pay, and promotion for knowledge contribution is difficult to implement and, in a real market, why not use real currency? (Some organizations have indeed experimented with micro-payment systems for internal knowledge sharing.) Moreover, deploying facilitators (which, in law firms, would be practice support lawyers) is expensive and the return on that investment is hard to quantify. Bryan likens facilitators to brokers in other markets; but brokers in other markets are revenue and profit centers while here they are cost centers.

On balance, unless I’m missing something, it seems to dress old problems in new clothes without really providing new solutions. Moreover, many law firms have tried going down the path suggested and encountered numerous obstacles (e.g., changing compensation systems). But I applaud Bryan for the effort to frame KM as an economic and market issue.