This article was originally posted on the 3rd of March 2018.
You may be wondering why we want to talk about Knowledge Sharing on a website which focuses around the value and sale of businesses. Well, it’s relevant.
Sharing knowledge is key to how you are able to structure your business.
How you are able to structure you business has a direct impact on value. In this article we will look at the 5 techniques for improving knowledge sharing and its relevance to structure in more detail.
Looking for a handy checklist that will walk you through all that’s needed when preparing your business for sale? We’ve created one with all you need – and you can download it here.
What is knowledge sharing?
Knowledge sharing goes beyond a training program. It crosses the divide into the culture of a business. Some things are common sense, some harness technology but all step beyond basic training programmes.
Where a company has a culture of knowledge sharing a whole host of things improve as a result.
- staff are more engaged
- innovation increases
- customers see delivery improve
- communication becomes transparent
- decision making becomes faster and smoother
Employee owned businesses are often excellent examples of knowledge sharing working at its best.
Below are 5 techniques to improve knowledge sharing throughout any business.
1. Encourage discussion
That is a bold title which masks any number of strategies within. When people talk, they share ideas, what has happened in their day, problems they face or ones they have resolved. The list is endless.
To encourage more discussion in your business, step back and take an objective look at the following;
- Your office layout. Does it encourage conversation or are there lots of barriers between workstations. Are break rooms inviting or are they broom cupboards which encourage people to leave the building. We are all limited by our physical surroundings but we can still make the most of what we can change.
- Off site events. Sometimes you have to take people away from the everyday environment to get them to open up. This doesn’t have to be a full blown away day climbing Snowdon. It can be 10-pin bowling, a family BBQ, simply an early shut down now an again to allow for a few drinks. How does the business encourage off-site events?
- Availability. Instigate an open door policy. The idea is as old as the hills but the supervisor and management levels within a business particularly need to be approachable and available to their staff.
- Suggestion scheme. Another old chestnut that gets a bad rap because of ineffective application. Create a suggestions scheme and then incentivise people to use it. Staff may once have been knocked back on a suggested improvement, never to make another. Show your staff you are serious about listening to them by incentivising your ideas scheme. Also announce successful ideas and give credit where it is due.
- Diarise it. Scheduling time initially may help embed discussion into the routine. Call it reflection or contemplation time if you like but get the message across that it is to be used to mentally work on the business.
2. Review your training and onboarding
If asked, many businesses will admit that their training and onboarding of new staff has changed little over the years. To encourage a culture of knowledge sharing, you have to embed it into every aspect of your business.
Being clear with new staff from the outset how you expect them to participate in business and share knowledge sets the benchmark. Then the business must deliver and demonstrate that same ethos back to them. If a new employee can’t see it in action, they won’t make it a habit of their own.
3. Maximise software
There are any number of databases and other software which make our lives easier these days. CRM systems help to manage and automate a customer’s journey through a business. AI is even beginning to do some of this for us.
Anywhere that knowledge resides within a person is a problem. That knowledge needs to be extracted for everyone to access should they need to. Using computer databases, search facilities, automated workflows and any number of tools makes this far easier to handle than in previous generations.
Think of these systems as the investment they are. The expense of purchase and implementation should soon be recovered by improved productivity (multiple staff can now deliver with a consistent approach).
4. Reduce lost knowledge
When a person retires or moves to another company, they take a wealth of personal experience with them. In really crude terms, your business has paid for that employee’s experience and owns it, yet we are happy to wave it goodbye without a second thought.
In the same way that there is an onboarding processes, there needs to be an off-boarding process. It’s not just about handing over keys and passwords. It is about handing over knowledge, relationships and sometimes up to 40 years of work experience. That takes time.
However, this should be an ongoing process throughout every employee’s time with the business. Whilst we hope for a long work relationship, things like illness and death in service sometimes take people without warning.
You won’t always have a chance to run a procedure at the point of leaving, so regularly checking in with people to ‘download’ their knowledge is a healthy thing for a business to do.
5. Share solutions and successes
Joseph Swan was the UK inventor of the incandescent light bulb in 1879. Problem is that Thomas Edison also invented his incandescent light bulb in the same year. With the Atlantic between them it was a race to be first, but how many times have you seen this scenario within the same business? Two people unwittingly working on the same problem, each not knowing about the other.
When you change a way of working, create a new product, improve customer service and, share the news widely. Share the solution or innovation you found and share the successful results.
By doing this you may stop someone from duplicating the same work in a different department or office location. You may also provide a short cut stepping stone to solve a further issue.
Benefits of knowledge sharing
So we’ve looked at how you can promote knowledge sharing in business, but what are the benefits?
At the start of this article we linked knowledge sharing directly to the structure you can create in your business. That structure directly links to its sale value
Switzerland Structure, all about independence
One of the 8 drivers of business value is named the Switzerland Structure because it is concerned with independence.
Stereotypically, Switzerland has remained neutral in world conflicts and was one of the last to join the EU. They like their independence.
In business terms the Switzerland Structure looks at the reliance of a business on a particular customer, manager, employee or supplier.
Independence from managers and employees
If a business has a reliance on one particular staff member or manager, it becomes vulnerable to that person leaving. You need to be asking who would fill their shoes. What qualities would that person need. How quickly could you bring a new person up to speed.
The danger to your business is that if that person fulfils a pivotal role, which then cannot be delivered to the same standard, you start to lose custom.
Example – Apple
There is no better known example of this than Steve Jobbs and Apple.
Jobbs co-founded Apple in 1976 with Steve Wozniak. In 1985 he was forced out after a power struggle with the then CEO, John Sculley.
He partnered up with George Lucas and had a hand in the creation of Pixar. He also founded NeXT Inc, which was eventually bought by Apple in 1997 when Jobbs took over as CEO.
The point here is that Sculley and Jobbs had very different visions for Apple and hence they parted. Apple then almost disappeared into obscurity under Sculley’s sole guidance, they had no one to replace the capabilities or the vision Jobbs created. It took the return of Jobbs to the helm to correct the course.
Since 1997 the company has flourished through innovation and design, but key is that those values now run through the entire business. Even now, years after his death in 2011, Apple have maintained their place spearheading innovation and design.
Independence from customers
A base rule of thumb is that no one customer should represent more than 15% of your total sales. Higher than this and you will begin to see a direct reduction in your business sale value.
Sadly, this is not always easy to manage, particularly for young, growing companies. Once stable, it is time to start broadening the customer base.
Consider your own business. If you lost your biggest customer, what proportion of work does that represent? How quickly would you be able to replace that income stream? Would you need to make redundancies to reduce overheads in an attempt to stay afloat?
Example – Inter City Express
Inter City Express, were a courier company in Cheshire employing 69 staff but 75% of their income came from delivering product for Phones4U.
When Phones4U collapsed in 2014, Inter City Express had to find a replacement for 75% of their annual turnover – quickly. Sadly, they failed and were wound up less than 6 months later.
The other element to this is that Phones4U essentially collapsed because EE and Vodaphone failed to renew contracts with them. Perhaps indicating they also had their own over-reliance on particular customers.
Independence from suppliers
The same over reliance on a supplier can also have a devastating effect on business. Or you can spread your supplier base to mitigate against it. It’s not sensible to try and put a percentage against suppliers, it’s about building in choice.
Rely on one main supplier and they control you. They can increase pricing, reschedule delivery, alter quality and there is little you can do when you have no alternative. You have to accept the changes.
You need to establish a selection of companies that can deliver what you want, when you need it and at the right price. This gives you flexibility if a supplier lets you down and it gives you more control over pricing because your suppliers know they are in a competitive market for your business.
Example – Tabtime
A past client of ours, Tabtime, were the sole UK outlet for a specific pill dispenser manufactured in the USA. Faults in production began to show themselves with a number of product returns, something highly unusual for this device.
Whilst a major seller for Tabtime, this device was not their only product and the US company was not their only supplier. They were able to divert customer orders elsewhere. There was a dip in revenues as a result (some sales could not be diverted), there was enough flexibility in their supply chain to minimise the effect.
They have given themselves enough flexibility in their supply chain to survive the issue until it was resolved, which took a redesign and 12 months in total.
In summary, if you can build a culture within your business of knowledge sharing, to a point where it is second nature, you build in flexibility.
Flexibility means your business relies on fewer elements that are outside of your control.
2020 demonstrates this more than ever. Some global names are falling, some might say crashing, down. They have become too rigid.
It’s not to say that smaller businesses haven’t suffered, but many are able to flex and adapt much faster due to their size.
- Local cafes converted to takeaway services overnight whilst places like McDonald’s remained closed for months.
- Dressmakers left weddings aside to produce scrubs.
- F1 teams turned to making respirators.
- Gin distilleries pumping out hand sanitiser.
- Many sectors adapted to produce PPE.
It is not to say that larger companies can’t react and change, but with many more people, locations and products to re-focus it takes a lot longer to do. Covid-19 did not allow for time.
Maintaining the ability to flex and adapt as a business grows is even more important than it ever was.
By sharing knowledge throughout your staff team you help to empower them. They have a more rounded knowledge to drive their experience and you can trust them to make the right calls when decisions are needed.
Knowledge sharing – business structure – flexibility to change
These are closely linked to each other and to the value your business will achieve on sale.
To read more about the Switzerland Structure and the other drivers of business value, why not download our e-book.