“We’re entering an era where a company’s competitiveness is determined by its return on information—how democratized its access is, how fast it moves, and how quickly it can be updated and leveraged to generate value.” — From Box’s 2014 “Information Economy Report”
Informatics: The collection, classification, storage, retrieval, and dissemination of recorded knowledge. — Merriam-Webster
Since Peter Drucker popularized the concept of the knowledge economy in his 1967 book The Age of Discontinuity, we have been moving away from things and toward information or ideas as the basis of economic value.
Organizations that traffic in information—like media, finance, and even software development companies—are quite obviously in the information business. We argue that all businesses should consider themselves to be in the information business and that the value of a project lies not in finished materials but rather in the often intangible ideas that arise, flow, and pool within and outside of the company.
Once upon a time, companies primarily purchased raw materials and combined them to make goods. Now many companies focus on combining information into systems that generate value. This is true even for more traditional industries such as manufacturing. What can set companies apart from the competition is the information they generate and what they know about their products. Value resides not—or not exclusively—in the product itself, but in knowing how to make and use it and extracting and monetizing that knowledge to yield a competitive advantage.
If you aren’t paying attention to the information part of your business, you’re not only putting yourself at a competitive disadvantage but leaving opportunities untapped. Read on to find out how, why, and what to do about it.
The function of project management sits at the nexus of what we refer to as the make and the know-how. Although project managers don’t actually construct the product (the make), they play an essential role in managing the information that allows others to make the product (the know-how). Project managers grapple every day with transferring and transmitting information securely, effectively, and efficiently both within the project team and among external stakeholders, including suppliers, customers, and regulators. Drawing a distinction between the make and the know-how can help this transfer happen more smoothly.
Identify, capture, use/share, measure, and connect
Separating the make from the know-how breaks down into the following areas based on five key ways that projects and organizations typically use and transfer information.
Your first step will be to identify all the places where pertinent knowledge resides: in documents, specifications, blueprints, and the minds of experts. The most efficient way to do this is using some kind of assessment process. Recognize that the information may not reside exclusively within the company. It may be part of a past project, but it also could be from another organization that is doing a superior job. This step also requires that you first define your project mission so you can target your identification activities. It may seem obvious, but an asphalt company wouldn’t generally gather information about the toy industry.
Next comes capturing the knowledge, which involves categorizing and organizing it through the lens of its intended audience and use. You may supplement codified or written information by interviewing experts within and outside the company and developing categories and keywords to organize the information. Store it in a place that’s accessible to those who need it (here’s where information management tools and the IT department come in).
Using and sharing the information lies at the heart of making project management more efficient. Once you’ve captured and categorized the information, how do you move information around the project so you’re sharing it intelligently among team members? Good communication plans are the key. While all project management teams communicate, that communication is typically ad hoc. Teams often don’t create a plan that explicitly defines what information must be exchanged in a meeting versus what can be shared on an intranet or through an email.
With a plan in place that considers who needs what information, when, and in what quantities and formats, you can take the next step to improve project efficiency: measurement.
The final—and potentially the most valuable and beneficial step—involves connecting your information to the larger world. In a way, this is the most significant piece, because it’s where you’ll find value that extends beyond your company’s current way of doing business and beyond your customers’ expectations. When you delight your customers, you move into the lucrative land of higher margins. When you can tie your knowledge to external systems beyond the individual product you create, you can further enhance that product’s value. No matter what your product is, it is just part of a larger system. Understanding the big picture of that system opens the door to higher profits. An example of this might be the asphalt company that goes beyond simply supplying asphalt to offer its customers information on how traffic and weather patterns affect the application of its product.
Getting to the value
Once you get good at generating, storing, managing, and measuring information, you can go beyond using the information to simply speed up and streamline product development. You can extract value directly from the information by selling it, even if you don’t define yourself as an information company.
Start your transition with your projects by identifying and extracting the knowledge you already have as each product is developed. Realize that your end product is inevitably part of a bigger system that you can affect and profit from when you become informatics enabled in the world of connected systems.
Famously, IBM made a transition from an iconic computer mainframe maker into primarily a service provider. Doing so likely saved the company. If you’re in any business that is, or is in danger of becoming, a commodity, you owe it to yourself to start thinking about how to separate the knowledge from the object. Be realistic. Is yours really the only company that can possibly make your product?
Fully participating in the information economy means accepting that every company is, in some sense, a media company. Every company is producing information. Best-in-class organizations handle their information in a way that treats it as an entity separate from the production of their products.
This is an abridged version of PDC’s latest white paper: Informatics-Enabled Projects, available to download here (PDF).
A special thank you to Alex Cooper, President of Management Roundtable, who contributed both his time and insights in multiple conversations on informatics.