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10 The Value of Knowledge Management

Price is what you pay. Value is what you get.
— Warren Buffet (1930 – )

This chapter addresses the major ways in which the value of knowledge management
(KM) is assessed. The major types of KM measurement frameworks are introduced:
benchmarking, the balanced scorecard method, the house of quality, and the results-
based assessment metric. In addition, the various ways in which value is produced by
communities of practice (CoPs) are discussed.

Learning Objectives

1. Understand the major advantages and shortcomings of the three KM metrics.
2. Apply the benchmarking, house of quality metric, balanced scorecard method,
and results-based metric to knowledge management performance measurement
systems.

Introduction

This chapter discusses different metrics framework to monitor progress toward those
organizational goals. An additional dimension is now part of the integrated KM cycle:
that of measurement or assessment of KM value (as shown in fi gure 10.1 ).
There are a variety of methods to assess how well KM is succeeding (milestones
and formative evaluation) and how well KM has helped attain organizational goals
(outcomes and summative evaluation). KM metrics include quantitative, qualitative,
and anecdotal methods. Each method presents different advantages and disadvan-
tages, and often a combination of different measures may be called for.