F13- KM is for Value Creation: WHOSE Value?

We learn many new things: concepts, skills and perspectives. To me, learning new perspectives is most important. When I learn a new perspective, it is almost like “having new eyes” to see what I could hardly see before. It is gaining a better understanding of how the world really works. The result is contributing better solutions or less problems to the world. Gregory Bateson said,

    “The major problems in the world are the result of the difference between the way nature works and the way man thinks.”

Let me share with you many “eye-openers” that my KM team experienced last April 2008.

My NGO — CCLFI.Philippines — in partnership with another NGO — Peace and Equity Foundation (PEF), the largest civil society development funding agency in the Philippines — scanned more than 950 anti-poverty projects PEF had funded since 1992 and studied the few most successful ones. The “eye-openers”:

Learning #1: Successful projects are so because they leveraged the local community’s intangible assets (cultural/social capital, structural and stakeholder capital, access rights, indigenous knowledge, etc.). Success factors are not coming from outside!

Learning #2: Facilitating information/knowledge flows (the prevailing paradigm in KM for development or KM4D communities) did not emerge as a success factor. Success is not from good KM among development actors but from good management of intangible assets of and by the community!

Learning #3: Many so-called “poor” communities are only financially poor (or they are poor only in infrastructure and other tangible assets). Many are wealthy in intangibles! As development professionals, we had to revisit our mental model of “poverty”.

Learning #4: We saw a parallel with global trends where market values of corporations consist more and more of their intangible than their tangible assets. Intangible assets have become more important for value creation, whether for community development or for profit making!

Learning #5: We also noted that more powerful actors in the external environment are, wittingly or unwittingly, draining the tangible and intangible assets of many local communities:

  • Commercial banks’ local branches are more deposit takers than lenders; the result: private savings are siphoned off from the local areas to Manila, the capital city (drain in financial capital)
  • Companies extract local natural resources, and most of the economic proceeds go to Manila and outside the country (loss of natural capital)
  • The central government collects taxes from the local governments and returns only a fraction for local government operations and for local development (drain in fiscal resources)
  • The brightest young talents migrate to Manila and abroad (loss of human capital)

Indeed, as Marcel Proust said,

    “The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”

To help fellow development practitioners gain “new eyes”, we developed a new framework we called Knowledge for Poverty Alleviation or KPA framework. We are now in the process of developing operational toolkits following this new approach. It is the application at the village level of the KBD or Knowledge-Based Development that former Head of Asian Development Bank’s Knowledge Center Daan Boom and I developed at ADB in 2007.

My last several blogs provided examples of how to measure the benefits and costs of managing tangible and intangible assets, which I argued is a better approach than managing only knowledge assets (=KM).

In the public and development sectors, value creation is often not measurable in economic terms. The reason: “valued results” of public service or development projects are often not traded in the marketplace, and thus there are no buyers and sellers who can negotiate and agree on their fair market value.

How then do we measure or assess value creation in the public and development sectors? A prior question is: WHOSE valued result are we going to assess? Development is a complex multi-stakeholder affair. Many actors and stakeholders are involved in development projects and each of them has their own definition of what is the “VALUED RESULT” they expect from a project:

  • Beneficiary community and each member of the beneficiary community
  • Project funder, lender or donor
  • Development NGO or institution which may be the lead implementor the project, and the development workers or professionals employed by the NGO
  • Local government which may be the recipient, conduit or guarantor of the development funds, and the elected or appointed officials therein
  • National government and the officials therein
  • Technology providers, construction companies, infrastructure and utilities providers, service providers
  • Academe, development research institutions and other support systems.

In the private sector, “value creation” is measured by unit price paid by consumers less unit production/distribution costs. This is what enters our GDP and GNP calculations. Actually, value creation is somewhat higher, because the “satisfaction of the consumer” is his/her consumer surplus which is the difference between what he/she is willing to pay for a product/service and the price he/she actually paid for it. Therefore, total value created = consumer surplus + producer/distributor profit.

In the development sector, the end consumer is the beneficiary community and all its individual members. And so my answer to my own question of “whose value” is: what the beneficiary community values. If all other stakeholders are happy, but beneficiary community members are not, I don’t think development has taken place.

Hence, to assess value creation in the public and development sectors, my view is twofold: (a) first and foremost, we must truly gauge the “satisfaction of the consumers” who are the members of the local beneficiary community. Many tools are at our disposal for “truly gauging” their satisfaction (from the structured surveys and interviews to the more unstructured story telling/listening, to unobtrusive behaviors such as extent of voluntary participation in the community project, and to a slew of other tools that look at both tangible and intangible outcomes of a project). (b) Secondly, we must look at the project outcome from a global sustainable development perspective (which can be the topic in another blog post).

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One Response to “F13- KM is for Value Creation: WHOSE Value?”

  1. Our Development Concepts may be THE problem « The giraffe Says:

    […] by apintalisayon My previous two blog posts (F13- KM is for value creation: WHOSE value? and F14- Monitoring and evaluation of KM for development) point to a key criterion in KM for development: What do community members really […]

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