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The Value of Knowledge Management 355

delivering value by seeking out both spoken and unspoken needs, translating these
into design targets, and communicating this throughout the organization. Further,
the house of quality allows customers to prioritize their requirements, tells us how we
are doing compared to our competitors, and then directs us to optimize those features
that will bring the greatest competitive advantage.
As with the balanced scorecard, the desired outcomes need to be specifi c enough —
concrete, detailed, and therefore measurable. For example, a desired outcome of
“ better collaboration ” is diffi cult to assess. A better desired outcome would be to
“ improve knowledge sharing to a level where at least 20 percent of an employee ’ s work
is based on existing knowledge provided by peers and/or the knowledge repository
in the next three years. ” This second statement can be measured more directly and
compared to an existing baseline, by administering knowledge audit questionnaires for
knowledge (as described in chapter 9) and through usage statistics for the repository.
These goals and objectives are placed to the left of the house as shown in fi gure
10.3 . Ideally, these desired outcomes should be short to mid-term and observable.
Some examples would be:

• Increase the number of communities of practice by three
• Decrease the number of customer complaints by 50 percent
• Decrease the number of unsolved problems by 60 percent
• Decrease the time to market for newly developed products and services by 40 percent
Priorities are next assigned to each of these goals by placing weights to the right
of the house. Useful metrics can then be listed on top of the house (the ceiling). At
the center of the matrix, we will see the level of correlation between the metrics and
the performance outcomes. These can be numerical correlations or low, moderate, or
high type values. By analyzing these correlations, we can zoom in on those aspects of
KM that are more likely to have an impact on overall company performance and thus
will contribute more signifi cantly to progress made toward the stated goals.
Some popular house of quality metrics used for KM projects include:
• The expense of reinventing solutions per year (or rework)
• The information/knowledge seeking time spent on average per employee
• The number of ideas that were implemented from the suggestion box per year
• Time spent on systematic capture and codifi cation of know-how for future use when
a project is completed (e.g., postmortems and AARs)
• The percent of employees who are aware of what KM exists within their organization
(e.g., a lessons learned database)