The Business Value of Taxonomy

Sitting around a conference table, listening to folks from different departments discuss a business process, it often strikes me how important a role words play. So apparently simple, yet so rich and deep, words frame our thoughts in ways more subtle than we realize. The use of the same word for different concepts or different words for the same concept can keep a group of intelligent people speaking in circles for hours.

The business value of taxonomy is the opportunity to get out from running in circles, overcome ambiguity, communicate effectively, break down barriers between silos, and empower us to work together and get things done—to collaborate and to execute.

A taxonomy is a controlled vocabulary, usually hierarchical, generally used to tag unstructured content in a document management system such as SharePoint. A taxonomy should include the key concepts that describe the domains of knowledge within an organization. It takes effort to build and maintain a taxonomy, which represents a significant cost. But it is that effort—the conversations, debates, and pragmatic compromises—that creates the learning and the value.

The most practical value of taxonomy, and the easiest to quantify, derives from its application to search, which is made more efficient when documents have been tagged with well-managed metadata. It has been estimated that knowledge workers spend thirty to forty percent of their time searching for information, find it less than half the time, and that ninety percent of time spent creating content is actually expended on recreating content that already exists but cannot be found. (See Darin L. Stewart’s Building Enterprise Taxonomies for details.) In addition to this obvious cost in time, there are the incalculable costs of bad decisions made because information cannot be found when needed.

In addition, taxonomy has value to such diverse areas as risk management and innovation, helping organizations discover threats and opportunities by structuring information in ways that make sense of what would otherwise remain amorphous and hidden.