Why is KM in the Rolls Royce annual report?

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It’s not often you see Knowledge Management mentioned in the annual report of a large organisation. Here’s why it’s in the Rolls Royce report. 

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Company annual reports are documents that public companies prepare for their shareholders, to tell them the current state of finances, outline activities and plans, and reassure them that the organisation is being managed well. The front part of the report is often a set of glossy photos and narrative about activity, while the back part  contains tables of financial and operational information.

So why would an organisation mention KM in their annual report?

The answer is that they would mention it to assure stakeholders that they are managing the business well, and that KM is one of their governance tools. 

There are a few mentions of KM in annual reports (ENI regularly mentions it in the contexts of risk management and operational excellence), but what I particularly like about the Rolls Royce example is the way they tie KM to a major business imperative. 

The Rolls Royce annual reports contain a section and a table on major business risks and their mitigation, and within this table we find the following:

PRINCIPAL RISK

HOW WE MANAGE IT

MAJOR PRODUCT PROGRAMME DELIVERY Failure to deliver a major programme on time, within budget, to technical specification or falling significantly short of customer expectations, or not delivering the planned business benefits, would have potentially significant adverse financial and reputational consequences, including the risk of impairment of the carrying value of the Group’s intangible assets and the impact of potential litigation.

Major programmes are subject to Board approval. Reviewing major programmes at levels and frequencies appropriate to their criticality and performance, against key financial and non-financial deliverables and potential risks throughout the programmes lifecycle. Investing in facilities and people to manage the level of disruption to our customers from Trent 1000 in-service issues and developing longer-term solutions to these issues. Conducting technical audits at pre-defined points which are performed by a team that is independent from the programme. Requiring programmes to address the actions arising from reviews and audits and monitoring and controlling progress through to closure. Applying knowledge management principles to provide benefit to current and future programmes.

The message to investors therefore is that Knowledge Management is a tool in use at Rolls Royce to secure the delivery of major programmes and projects, both current and future. 

That’s a good way to clarify the value of KM to the business, and to reassure shareholders that their investment is being managed well. 

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