Entovation® International - Delivering Knowledge Innovation Strategies for the Millennium
Debra Amidon Interview - KM Magazine

Excerpts from the interview appear in the 'Your Say' article of
the September 2002 issue of KM Magazine (Vol. 1 No. 6.)
published by the Ark Group

How would you define risk management? According to the Project Management Institute: Risk Management includes Risk Identification, Risk Quantification, Risk Response Development and Risk Response Control. Risk Management is the practice of maximizing positive results while minimizing the negative. Since Knowledge Economy is evolving at a blistering pace and with kaleidoscopic implications, the only way to navigate successfully is to move ahead with open eyes and indicators – both quantitative and qualitative - for opportunities as well as risk. Traditional management treated risk as financial indicators – degrees of exposure. Today’s complex management requires a deeper understanding of the relevant intangibles – the hidden value of the enterprise – that require more modern views of systems dynamics that build collaborative advantage.
Why is risk management so important to businesses? Risk Management is integrally linked to business strategy and the innovation process that enables ideas to get to market efficiently, effectively and competitively. Risk-taking has always been essential to the innovation process. However, with the downsizing and restructuring fever as a panacea to profit, risk-taking – even responsible risk-taking – has been squeezed out of the system. Contrary to popular opinion, innovation is not necessarily creativity, nor is it R&D. Innovation is putting knowledge into action in each phase - knowledge creation, knowledge conversion and knowledge commercialisation. According to Fortune magazine, innovation is a whole new form of corporate behaviour that is comfortable with new ideas, risk and even failure. Understanding the levers to optimise results must be managed systematically or leave it to serendipity.
How have attitudes towards risk management changed in the wake of recent events? The natural inclination to trauma or tragedy as represented in the events of 9/11 is to retreat. When people are wounded - either physically or emotionally - the tendency is to withdraw. This is essential to deal with immediate injuries and to develop some strategies to prevent further injury. However, depending upon the magnitude of the infliction, the results can lead to panic and paralysis. These conditions lead to increased fear, additional downsizing and protectionist actions that exacerbate the problem. Bad economic conditions produce bad economy...produce low morale...produce no risk-taking...produces bad economic conditions...etc. It is a death spiral without a forward agenda to motivate, inspire action. The same phenomenon occurs in an organization. When companies are operating in panic mode (as appears to be the case worldwide), the behaviour of internal and external stakeholders – customers and investors included – changes. These short- term, knee-jerk management reactions fuel intimidation, inaction – the precursor to stagnation. The irony is that with the global networked economy and the technology available, the Knowledge Economy affords us unprecedented opportunities. The future belongs to those courageous knowledge leaders who can effectively balance ‘real-time’ innovation and global optimisation of resources – both human and technical. The real issues lie within the travesties of Enron, Martha Stewart and world.com and others. This is the evidence that executives seem to be managing the financials - by whatever means necessary - to affect their balance sheets to the public. The lack of proper disclosure runs contrary to the basic tenants of the Knowledge Economy – open, trusting, sharing and respectful. Perhaps it is time that executives began to monitor the moral fabric of their organizations in addition to the financials!
Where does responsibility for managing risk typically fall in an organisation? The ability to take responsible risk lies within every individual. However, there are core principles, standards of operation, and better practices that can be made explicit to ensure success. For some organizations, it is inherent in their articulated value system or code of ethics. For others, it resides in the mission of the Executive Office – the CEO him or herself. In the end, it is a matter of practicing what we preach, walking the talk, being the role model for desired corporate behaviour enterprise-wide.
How can knowledge management help ensure employees at every level are involved in minimising an organisation’s exposure to risk? Knowledge Strategy – not knowledge management per se – should be the core of the organization. Managing the innovation process is fundamental to driving the profitable growth of an enterprise or the prosperity of a nation. The new knowledge value proposition goes well beyond cost, quality and time. It requires a systematic integration of the economic, behavioural and technological factors – all three of which include significant elements of risk. According to Peter Drucker, innovation – and the ability to measure the performance thereof - is the one core competence needed for the future. Each individual has a role to play in enhancing the innovation capability – from idea creation through application.  Ultimately, each individual monitors his or her own behaviour. Few individuals come the office in the course of a day to do a bad job. Indeed, all want to make a contribution to the success of the enterprise. However, it is the organization values, culture, incentives and infrastructure that determine the effectiveness of the ability to do so.
How important is an effective knowledge sharing culture in this process? If we have learned nothing else in the last 15 years of managing knowledge strategy, we know that such a culture is essential. We also know that creating this knowledge-sharing culture is the most difficult aspect of the process. However, we are steeped in the traditions of competitive strategy – as individuals, as teams, as enterprises and as nations. Creating a culture of collaborative innovation may be the one critical success factor for sustainable enterprises – profit or not-for-profit; developing or industrialized; small, medium or large scale.
In a broader sense, how can knowledge management help to reduce an organisation’s exposure to risk? Risk Management is not a function of the financials; perhaps it never was. Instead it is a function of the inherent behaviours practised in the organization – i.e., a function of the people. And what is it about people? It is essentially the knowledge they create, how it is shared and moved within the organization to result in products and services to benefit a constituency. The more the organization manages its most precious asset explicitly – and we would argue through the innovation process itself – the more chance the results will be favourable (i.e., minimizing adversity and capitalizing upon opportunities.)
Will the association between risk management and knowledge management continue to grow in the future? Why do you think this is? As the policies and practices of knowledge management evolve effectively into the business strategy of the firm and operate on all levels simultaneously (i.e., from the bench engineer to the executive suite…and everyone in between), we will witness what has been the purpose of a knowledge focus after all. We are not for a lack of good ideas; and for the most part, we are not for a lack of will. What is missing in most organizations is the ability to make a contribution – the tacit dimensions so well articulated by Ikujiru Nonaka and Karl-Eric Sveiby. The world our children’s children will inherit depends upon how effectively we will mange this resource. Let us proceed with appropriate caution, but more importantly – energy and ethics of which we can all be proud.
Are there any other issues that you feel deserve closer attention? Risk management is a dynamic process – not a discrete activity. The inherent elements – and their influencing factors – are in the constant state of change and must be monitored accordingly.

 


© Copyright 2002. Used by permission.

back

© 1996-2000 ENTOVATION® International. All rights reserved.
Page address: http://www.entovation.com/amidon/kmmag.htm
Last updated: 14 Sep 2002