I tried to start my last post by stressing the importance of learning a broad set of basic skills to complement one or two deep skill-sets. Ultimately though I was reminded that there is simply too much to know for that approach to be feasible.

Nonetheless, there’s no sense ignoring useful tools when you find them, provided there is a simple way bring them into your toolbox. It is with this in mind that I’d like to mention another McKinsey Quartely article on the Industry Cost curve. How it’s useful to KM is not immediately obvious, but bear with me and I’ll explain why I feel it’s useful re: the deployment of KM resources within a firm.

If you’re going to read the rest of this post you really should read the McKinsey Article.

Welcome back.

The Industry Cost Curve is an analytical tool that is used in pricing and to assess just how profitable a line of business could be. Traditionally it is used to analyse commodities to determine whether or not to build a new plant and the price/margin a given commodity might be able to fetch.

With firms seemingly wed to a cost-based approach to pricing (1 hour of work costs $x and is billed at $y) and offering a arguably uniform level of quality, the Industry Cost Curve is relevant to KM in three ways:

• effective deployment of KM resource can help a firm improve its margin by executing deals in a less costly way;
• analysis of the various curves (by engagement type) can help a firm understand how it can best deploy its KM resource by identifying areas where the impact will be greatest; and
• at a more basic level, this can help identify the business case for a KM project, even if it’s a smaller, specific piece of work rather than a giant search, taxonomy or portal project.

Now, if you’re like me, you may struggle to conduct this analysis in on your own, but I imagine some boffin from your strategy or finance department might be able to help with some of the numbers. If your efforts prove successful, your hard work will help raise the profile of KM as a strategic tool in your practice; and if not, you’ve conducted an interesting piece of analysis which will increase your insight into the practice you support.

Before you go off piste with this, chat to your business manager to see if what tools they use to manage the practice and see whether there’s any other tools for you to adopt and adapt.

This entry was posted on Thursday, October 29th, 2009 at 8:06 am and is filed under KM. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.