The economic case for knowledge sharing

After my post on 70:20:10 at the end of last year, I took a bit of a break from posting to read more research on this area and was struck by the findings of a number of studies that show just how crucial it is to create knowledge sharing cultures. It’s becoming clear that there is a consensus that it’s not only linked to business survival, but to the prospects for Australia as a whole. Our government’s economic research stresses that while innovation is vital throughout the OECD now more than ever, Australia’s circumstances make innovation our number one priority.

 

The decline of productivity growth in Australia

Capture

In the period since 2012, Australia’s productivity growth has declined steadily and it’s not alone. That said, the issues that give rise to this problem are domestic according to Australia’s treasury analysis:

“Australia’s recent productivity slowdown is not an isolated occurrence. Developed
economies have experienced slowing productivity growth in recent decades,
particularly during the 2000s. […] Australia’s recent productivity performance appears to be driven by domestic factors rather than factors common to developed economies.” (Australian Treasury)

The report points out that Australia has several specific challenges:

  1. Ours is an economy in transition from a mining and agricultural one to a more diverse economy, and
  2. Australia does not have the capacity to generate the level of new product innovation it would need to arrest the productivity decline on its own.

The second point underscres the degree to which Australia’s growth is welded to the level of innovation we can import from countries such as the USA.

Worryingly, the same research goes on to point to a worldwide slowing down of innovation generally worldwide. For example Gordon’s provocatively titled paper Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds actually concluded that the factors which saw product innovation underpin our growth for the last century are gone forever.

 

All is not lost

Despite this, the latest Australian Government Innovation Activity Survey shows clearly that the proportion of businesses here who are defined as “innovation-active” is actually rising and is now almost at 50%. Even with our limitations, the good news is that now more than ever, Australian businesses have new forms of innovation beyond this traditional pure R&D available to them and the Australian Government points to a trend for Australian businesses to innovate in new areas.

“… business innovation encompasses much more than these measures. Australian firms undertaking innovation are more likely to invest in purchasing new equipment, training and marketing than investment in R&D or acquiring intellectual
property. ”
(Australian Treasury)

 

The number one barrier to becoming an innovative organisation

The same survey polled businesses to determine the greatest barriers to innovation and this is where all this links back to training.

The number one barrier to further innovation was a lack of skills. By comparison, the cost of innovating was a barrier for fewer than half as many buinesses.

More than a quarter of innovation-active businesses and almost a fifth of all businesses pointed to skills shortages as a concern and it was also the number one barrier for those businesses who were not actively innovating,

 

The solution

The largest Australian survey related to innovation, staff performance and skills was undertaken as part of a Ph.D. thesis for RMIT University, Melbourne by Peter Chomley who reported that his research “confirmed the relationship between the dimensions of Knowledge Sharing Behavior and Workplace Innovation” – in other words that there is a direct link between use of knowledge sharing in the workplace as the means of skills development and innovation outcomes.

“Knowledge sharing links individual, team and organization by sharing knowledge and expertise from an individual to an organizational level where it is converted to competitive value and advantage for the organization.”

It is here that 70:20:10 becomes central to this picture. In fact, Chomley’s research prioritises a number of the same ideas I pointed to in my last article on that topic :

“the behaviors investigated in this thesis were not constrained to
organization specific knowledge and include the sharing of knowledge gained
outside the organization of employment, either through continued education,
participation in professional bodies/Communities of Practice (CoP) or Communities
of Interest (CoI), or in boundary spanning activities.”

It makes sense. While it’s obvious why creating a new product will lead to business outcomes, we often forget just how much we can gain from less visible innovation.  For example, simply creating a knowledge sharing culture has been shown to foster innovation.

I wonder how often your organisation repeats its mistakes? How often has one project team found an error and addressed it, but without documenting or sharing their findings so that a second team repeats the same error completely unaware of the solution? Innovation will happen naturally if you let it (in this case the innovation is the rectification of a fault). If only the organisation had established a culture that saw it captured as an asset!

The challenge is to prepare the ground that turns individual innovation into team innovation and team innovation into organisational innovation.

Conversely, the absence of a knowledge sharing culture not only prevents the organisation capitalising on innovation but stifles innovation itself by conveying a message that it is undervalued.

So… how good is knowledge sharing and 70:20:10 generally?

  • 70:20:10 is the natural way humans learn – and we are being told by businesses that if only their staff had greater skills they would be able to innovate.
  • Meanwhile that very same culture is itself fertile ground in which innovations germinate and grow.
  • Best of all, as I’ve previously pointed out, 70:20:10 is easier and cheaper to do than you probably realise.

It’s a bit of a no-brainer really but it will not happen by itself. 70:20:10 environments don’t just happen – they are fostered by supervisors and by training coordinaters – Chomly’s work highlights this point too:

“From the managerial perspective, the managers and chief knowledge officers may
create a knowledge-friendly environment through the encouragement and
facilitation of teamwork, communities of practice, personal networks, strong and
weak ties, and boundary-spanning.”

and finally he reiterates the key role that policy makers must play:

“Management policy is informed by these findings and can be further developed to
encourage a sharing, learning and innovative growth mindset”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s