Internal knowledge markets can facilitate information sharing within large organizations. The trick for executives is figuring out how to make them work.
Los Angeles-based AECOM Technology had a problem. An AECOM plant in Argentina had made a successful move into biofuels processing and was producing sugar dust as a byproduct of its biofuels production. The problem: Airborne sugar dust can be explosive — and AECOM was concerned about the possibility of having fireballs near its fuel processing. A team of AECOM employees based in London had several ideas, but after weeks of back and forth, a solution finally emerged — via an internal company bulletin board — from an AECOM engineer in Australia. The type of challenge AECOM faced — locating internal knowledge on a specialized topic — exists in any large organization. The larger and more segmented the company, the harder it is to match its people to its problems. As Lewis Platt, former CEO of Hewlett-Packard, once noted, “If only HP knew what HP knows, we would be three times more productive.” How can a large organization address the challenges of managing information flows internally? One answer is an internal knowledge market. In broad terms, internal knowledge markets are protected environments where users trade their knowledge via price mechanisms. Although such markets have existed in different forms for years,1 their use to facilitate knowledge transfer inside organizations is relatively new. Early adopters such as Infosys, Siemens, McKinsey & Co. and Eli Lilly have demonstrated their value for managing information flows relative to traditional knowledge-management solutions. For example, the software company SAP has used a knowledge market to facilitate peer-to-peer response to questions among enterprise software developers both within and outside the company. This form of Q&A has improved response times substantially while saving SAP more than $6 million in technical support costs.
The Leading Question
How can companies use internal markets to help employees locate specialized knowledge?
- Seed the internal knowledge market with key content and then subsidize development of additional solutions.
- Let prices float in the knowledge market.
- Manage the knowledge market like a market maker or the Federal Reserve — not like a central planner.
In general, markets cause resources to speak up and self-identify. They facilitate reuse of existing information, cause new information to be created when needed and efficiently regulate use of resources, including people’s time.