Organizational Know-How: A Valuable Asset

Board of Directors and the C-Level executives share responsibility for ensuring an organization’s assets are protected from risk of loss.  As a result, we see Board directives toward ensuring steps are taken to protect valuable assets. Most Board members and executives when asked, would include in their list of significant tangible assets things like real estate, facilities, machinery, office equipment, etc. They would likely also list valuable intangible  assets as well, such as organizational trade secrets, patents, copyrights and trademarks.

How many executives, however, would list organizational knowledge and know-how, including business processes, policies and practices, as a valuable and critical asset respective to the success and longevity of the organization?

While most executives readily acknowledge the importance of business process and best practices, it can be difficult to find evidence of any program, project or person who is accountable and responsible for developing and protecting these valuable organizational assets.

Executives that lead nonprofit organizations are particularity vulnerable to the risk associated with overlooking the value inherent in their organizational business processes and the “know-how” that typically resides within the minds of their managers and staff. For example, I recently learned of a nonprofit organization that was facing a significant budget crunch, due to a significant drop in contributions. The crisis wasn’t precipitated by the recession, or the loss of a significant donor or foundation grant. The causal event of this crisis was attributed to the exit of a fund-raising chairperson and most of her committee members. It could easily be argued that the true cause of the crisis was management’s failure to effectively manage and protect critical organizational processes and best-practices, as well as the knowledge and expertise of the people who comprised the fund-raising committee.

This chairperson and her committee were responsible for raising tens of thousands of dollars for the nonprofit each year, through special fund-raising events. Over the years, committee managers and members improved their fund-raising process, including the tools that they used to plan, implement and manage events. Marketing materials were developed, tested and refined. Promotional scripts used to solicit sponsors and attendees were written, tested and improved upon. PC and online information systems were developed to automate activities and tasks, and enable the team to collaborate remotely which improve efficiency and productivity.

All of this was good, except for the fact that nobody was made responsible and accountable for documenting exactly how things got done. So, when the committee chair and most of the members of this fund-raising team decided to move on out of the organization to pursue other interests, the nonprofit Director found herself in a serious jam. Out the door, too, along with her staff, went all of the knowledge, expertise, processes, best-practices and managing/support tools needed to raise the funds that would keep the organization fiscally sound.

While the new fund-raising committee chairperson and new members had some material and information to work with, what remained of the prior committee’s work was sketchy and largely unorganized. Much of the know-how resided on committee members personal computers and in their own “gray matter”. The new committee decided to start from scratch and develop everything associated with fund-raising events anew. The previous existing assets had taken many years of time and thousands of dollars of investment to develop and perfect. In addition to the obvious loss of time, money and energy, the new committee and chair would likely find they also do not have the time they need to begin anew and still meet or exceed the previous years fund-raising amount.

Today, many for-profit and nonprofit organizations understand the significant value of managing their business processes, best-practices and policies as valuable organizational assets. Many companies have process improvement programs and initiatives in place, with managers and staff who are both accountable and responsible for documenting, analyzing, improving and managing how an organization successfully operates.

Business methodologies supported by software applications are available for personal computing platforms. For virtual organizations, web-based collaborative services enable geographically dispersed team members to work together online at any hour of the day. Many solutions are affordable for even the smallest company or nonprofit organization, so cost is no longer a factor when it comes to managing organizational knowledge assets. As more Board members and managing executives become aware of reasonable strategies to manage and protect these kinds of organizational assets, more organizations will be able to invest more in continuous improvement of best practices rather than re-inventing creating lost knowledge-based assets.

In future posts, I’ll introduce some of the methodologies, strategies and collaborative tools that can be used to develop, implement and protect organizational best-practices and business processes.