The Rise of Internal Knowledge Markets

A new article in the Sloan Review by Hind Benbya and Marshall Van Alstyne, How to Find Answers Within Your Company, covered the rise of internal knowledge markets. They define these markets as “protected environments where users trade their knowledge via price mechanisms.” They note that “while these markets have existed in different forms for years, their use to facilitate knowledge transfer inside organizations is relatively new.” Early adopters include: Infosys, Siemens, McKinsey & Co. and Eli Lilly.  These firms appear to have demonstrated an increased value for internal knowledge markets for managing information flows over traditional top-down centralized knowledge-management solutions.

Market forces can differ when regulating knowledge. This article provides guidelines on how to design, launch and sustain internal knowledge markets. An internal knowledge market is further defined as a forum within an organization that matches knowledge seekers with knowledge sources. This system is more dynamic and provides just-in-time guidance rather than the centralized codification of best practices.

I can see this but then I always found these centralized knowledge management repositories to be ineffective. The only old school (pre-enterprise 2.) knowledge management efforts that I found to be effective were more nimble process-aligned systems. In these case both guidance and expertise was aligned with process steps. This was more fluid and better matched to business value.

These internal knowledge markets represent a third approach.  The authors note that they are not for everyone and require organizational scale to be effective.  They more explicitly build in incentives to participate. They quote David Ritter, CTO of InnoCentive, a supplier of knowledge markets - incentives need to take three forms — spendable currency, recognition for expertise and the opportunity to have a positive impact.  However, if you do not set the pricing mechanism right you can flood the market with poor quality content as HP and Siemens found out.

I wish that my former firms had such systems, as I really like to share knowledge, even when there is little reward. The authors raised another point that I saw first hand. When colleagues are also competitors, individuals may hoard information for personal advantage. This was especially true when employees were ranked against each other in performance reviews. Instead rewards based on quality of contribution can promote information sharing. In this case anyone who passes a certain milestone is rewarded. Coworkers can help each other so collaborative knowledge trading helps teams succeed. I like this approach much better.

Knowledge markets appear to require a lot of economic fine tuning but they are rewarding positive behavior. If they are done right I think these markets can have a positive impact on organizational culture, in general.  However, there is risk and participants can manipulate markets to their own ends leading to a negative impact on culture. This is where the fine tuning comes in to avoid gaming the system.  I think there is a lot of potential here but it will not be easy. 

 

Comments

[John Tropea]

Here's my notes Bill...I'm simply not sold on the market idea and relying heavily on the incentive aspect, I'd rather the ecosystem idea

http://johntropea.tumblr.com/post/2394433917/fixed-reward-incentives-vs-floating-market-or-ditch-the

[bill Ives]

John - Thanks for sharing this. I am not sold on Knowledge markets either as I hope I conveyed in my conclusion. Markets can be gamed. Bill