Friday 10 July 2020

5 ways to reconcile the revenue stream and the knowledge stream

There is often  conflict between creating revenue and creating knowledge. Both of these require time, resources and incentives, and so are often in conflict. The problem is that knowledge is the source of future revenue. 


Timesheet logo from wikimedia commons

Any piece of revenue-generating work can create knowledge as well. In parallel with the revenue workstream, we have a potential knowledge workstream, both of which add value.

Knowledge is a by-product of what we do - we learn about the processes we use, the products we create and the customers we serve. That knowledge can be captured, shared, reapplied, and can help us perform better in future.

However the capturing and sharing takes resource and time - time which could be spent generating further revenue now. Time capturing lessons, creating best practices, seeking for knowledge from others, asking and answering questions etc.


We see this conflict particularly in fee-earning industries such as the legal sector or consulting sector, where people need to write their time to specific current projects and clients. They are often given timewriting targets of a certain number of billable hours, thereby incentivising the revenue stream at the expense of the knowledge stream.  Any time spent on knowledge work (assuming knowledge work is non-billable) is time that cannot be written to a client, and therefore time seen as "lost" or falling outside the targets.  The firm makes more money in the short term, but suffers in the long term.

There are a few ways around this, even where you have a timewriting system.

1. You can remove the timewriting system, and manage by objectives and fixed fees instead. This is becoming more an more common in the legal world, although firms often still use timewriting to monitor internal costs.

2. You can include Knowledge Management activity within billable hours, so that documenting and sharing the lessons from a client project can be billed to that client. This will need to be agreed up front with clients, but is surely a reasonable request. If the client wishes to make use of the firm's knowledge, then it is reasonable to charge for knowledge work.

3. You can introduce a non-billable timewriting code specifically for KM activity, funded through a central pot of money. Knowledge work then becomes an overhead.

4. You can involve non-timewriting staff to do the bulk of the KM work, interviewing the senior staff to gain the knowledge, for example, or searching for relevany knowledge. Again, knowledge work is an overhead. This is an approach used in many law firms, where paralegals and library staff do much of the knowledge work. It is also increasingly used in consulting firms, where dedicated knowledge centres take care of much of the knowledge work.

5. You can use junior staff and trainees to do the bulk of the KM work, treating this as a development activity. This is my preferred option, as it not only resources the knowledge workstream, but also brings the junior staff up the learning curve at an accelerated rate, and creates a cadre of fee-earners who have experience of the value and power of KM.


If you are in a fee-earning organisation where billable hours are a target, and timewriting is a way of life, you need to find a way to recomcile the short-term pressure to earn fees, with the long term investment that knowledge management delivers
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