KM, Meet "Peer Production"

Just why is that "doing" Knowledge Management at law firms seems so hard?  Is KM itself simply an ineffable concept, meaning that virtually no two people agree on what it means?  (And that, when they then try to go about it, the results are what you'd expect, as if every building subcontractor on a construction site were looking at a different set of plans.)

Is it just that lawyers don't "share nicely" together (with the implication that they never will)?  Or is it merely a matter of getting the incentive structure right, implying that heretofore we've relied on weak and indirect incentives such as exhortation from above?

McKinsey, as befits them, has written a piece more or less asserting that if we only wrap a classic marketplace structure around knowledge management, our problems will be solved:

"[The most talented employees] will be unlikely to exchange their knowledge without a fair return for the time and energy they expend in putting it into a form in which it can be exchanged. [...]

"In short, effectively exchanging knowledge on a company-wide basis is much less a technological problem than an organizational one: encouraging people who do not know each other to work together for their mutual self-interest.  There is, of course, a well-known, well-tested solution to making it possible to exchange items of value among parties who don't know each other.  We call it a market."

This may come as a surprise to you, but I am of the increasingly firm view that this is wrong:  Paying colleagues within a firm (explicitly, in dollars and cents) for their know-how will prove not only ineffectual but divisive.

To be sure, McKinsey gets much of their discussion of KM right, starting right off the bat with their recognition that both "Build it--they will use it" and "Take it from the top" approaches will end in grief and disappointment.  They write that the approach of letting "a thousand Web sites bloom" is the best alternative so far, but still not good enough across a "global" organization because disparate "standards and protocols" will make information generated by specialists in one sub-practice group inaccessible elsewhere.   I can only scratch my head:    One wonders if the author never heard of blogs—inexcusable, if so, as the piece was written in the third quarter of last year.

Instead of neoclassical market models of motivation, I'd like to introduce you to the concept of "peer production," a shorthand coined by Yochai Benkler, a professor at Yale Law.  In an interview running as a sidebar to the cover story in this week's Business Week, Benkler explains the notion in a nutshell: 

"[Benkler,] who studies the economics of networks, thinks such online cooperation is spurring a new mode of production beyond the two classic pillars of economics, the firm and the market.

"Peer production," as he calls work such as open-source software, file-sharing, and Amazon.com Inc.'s millions of customer product reviews, creates value with neither conventional corporate oversight nor market incentives such as payment. "The economic role of social behavior is increasing," he says. "Things that would normally just dissipate in the air as social gestures become economic products." Indeed, peer production represents a sea change in the economy -- at least when it comes to the information products, services, and content that increasingly drive economic growth."

"I suggest that [what] we are seeing is the broad and deep emergence of a new, third mode of production in the digitally networked environment. I call this mode "commons-based peer-production," to distinguish it from the property- and contract-based models of firms and markets. Its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands.

"The paper also explains why this mode has systematic advantages over markets and managerial hierarchies when the object of production is information or culture, and where the capital investment necessary for production-computers and communications capabilities is widely distributed instead of concentrated. In particular, this mode of production is better than firms and markets for two reasons. First, it is better at identifying and assigning human capital to information and cultural production processes. In this regard, peer-production has an advantage in what I call "information opportunity cost." That is, it loses less information about who the best person for a given job might be than do either of the other two organizational modes."

(The title is something of an in-joke premised on my candidate for the single most influential economic paper of all time, written by Nobel laureate Ronald Coase, his 1937 essay "The Nature of the Firm," clocking in at all of 14 pages written in pellucid English—need I add I commend it to you?.) 

Back to KM in a law firm. 

The incentive for lawyers to put their expertise on display?  Not "market prices or managerial commands," but "a diverse cluster of motivational drives and social signals."  Precisely. 

And the single biggest "instant win" a KM system can provide?  Identifying "who the best person for a given job might be." 

How do we, then, actually get it done?  The foundational building-blocks of such "peer production" today are the emerging generation of Net technologies including file-sharing, blogs, wikis, and social networking sites such as Tribe or Meetup Inc.    Tim O'Reilly, the famous tech book publisher, characterizes the common theme of these tools with a felicitous phrase:  They share "an architecture of participation."

So:  Motivated professionals responding to social signals adopt tools designed to facilitate participation, and "peer production" takes over from there.  Will there actually come a day when the economist's arsenal of explanatory models puts that concept on a peer with the centuries-old pillars of The Firm and The Market?   Read Benkler.  I'm finding myself persuaded.