December 07, 2004
Business Models for KM
After wondering for three years about the business model of KM, let me summarize where I’m at. I can think of five different archetypes:
Knowledge-oriented Operating System – Windows and Linux are based on a document-centric desktop metaphor of files and folders, which is becoming more and more inappropriate as the amount of information we must process each day skyrockets. Thus, we are gradually moving toward a community-centric feed/author metaphor. The associated client software on our PCs, PDA’s and phones will thus evolve accordingly (see for example theHaystack project at MIT). The associate business model is Software Licensing, epitomized by Microsoft. There will be one major change, though. Most innovations are likely to be born in the Open Source world, and industrialized and packaged later in a commercial software product if they prove to be successful.
Personal Knowledge Management (PKM) – Banks have been the first commercial organizations to charge for money transactions, which are nothing more than data safely moved from one account to another. Other companies like eBay, AOL, (and to a lesser extent Amazon too) are doing in fact very similar things, and « social networking » companies like SixApart (Typepad), Meet-up and LinkedIn as well. Most collaboration tools belong to this Personal KM segment, because collaboration spaces are now created directly by the people who need it, without a complex workflow process. PKM companies focus on the user experience. They charge their clients for information distribution, processing, exchange and storage. They command a fee not so much for the service itself than for the quality of the service. As an illustration, e-mail is almost free, but spam-free, virus-free and malware-free e-mail is not. Mastering ID and authentification (like i-names) is going to be key here.
Enterprise Knowledge Management – Governance bodies –states, corporate staff, corporate boards, administrations, NGOs etc. – need to be able to monitor and control the flow of information that flow in and out of the communities under their authority, so as to enforce common laws and rules, to protect their « citizens » against external threats, and to take pro-active strategic action on their behalf. Typically, companies like Autonomy, Verity, Business Objects are typically in this ball game, and the business model is a combination of license fees and services. It seems to me however that mixing Enterprise KM and Personal KM in a packaged offering, which a lot of « collaborative software » companies do, is a dangerous strategy. Not only is there a high risk of being spread too thin with a one-size-fits-all, rigid (and thus stupid) software, but the users and the governance bodies are orthogonal and often have conflicting interests. Users want ease of use, innnovation, immediate value. They have a small buying power and a big viral marketing power. Large organizations want control, processes, security and have a large buying power, but rarely generate worldwide standards. Companies specializing in Enterprise KM should thus focus on their crown jewels, business intelligence, and interfaces (aka connectors) to selected PKM tools that can easily be integrated in the overall framework.
Learning and Change – « Knowledge Management » and « Managing in the knowledge age » really mean the same thing. KM is about new social pratices and tools to integrate collective learning in our daily work, which introduces a paradigm shift in the very concept of work. This shift cannot happen overnight, and it involves a lot of ongoing education, training, coaching, facilitation and consulting services at all levels of the organization. This is the role of the « corporate university » which can be externalized to some extent. In the US, APQC is a good example of this business model, and the late IKO as well. Somewhat surprisingly however, universities and business schools only provide a very narrow spectrum of the required services, because they usually take care of just one constituency, the management, and only in off-site settings.
Intelligence services – This is to take care of the many cases when knowledge flows must be kept confidential or even secret. Operations must then be executed by a trusted third party to minimize risks. Typical example is a take-over or other forms of corporate warfare that we see developing throughout the world especially with respect to tech firms. This is typically the business model of management consultants, investment banks and specialized consulting companies like Kroll. This might explain why there are less and less junior consultants and more and more senior consultants in those firms.
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