Tuesday, June 21, 2016
Putting Emphasis on Knowledge Assets
Knowledge workers are a critical source of value and in today’s world of intellectual assets, they represent your only competitive advantage. The fact that so many companies struggle to attract and retain top talent attests to a much deeper problem – your existing knowledge assets are poorly managed. There is enormous waste every day in every company. It stays hidden out-of-sight with too much emphasis on the day to day operational stuff. It has to do with not leveraging your knowledge and people like you should.
Part of the problem is not recognizing intangible assets. This is partially due to the inability to measure and report these types of assets. We are continuously bombarded with financial statements that have a narrow focus on the hard assets. Consider this fact: In the past 40 years, intangible assets have grown from 17% to 84% of total Standard and Poor’s assets. It seems to be a running joke on CNBC TV – how many Caterpillar Tractors can we fit into Facebook; referring to the market capitalization or value of a company like Caterpillar which was once the envy of Wall Street and now, it is companies like Facebook and Google that are worth ten times the value of Boeing Aircraft or Caterpillar Tractor. If you think this stuff isn’t important, take a look at what the marketplace is saying - intangible assets such as knowledge are everything – Google, Facebook, etc.
Now that I’ve made my point about why it matters, let’s talk about what you can do about it. First, you have to make investments in knowledge work and not just the basic operational work. Many companies tend to put a lot of emphasis on day to day operations. Growth of knowledge and intellectual assets is not emphasized. Budgets are tight and it’s hard keeping operations up to speed. But if you fail to make investments in both, operations and knowledge, you are going to pay the consequences.
“Knowledge assets are the knowledge drivers of an organization’s success. And they can be unstructured, tacit knowledge. So as an example, there would be the deep expertise of key personnel. Or knowledge assets can be structured, explicit knowledge, codified. Examples there would be patents, copyrights and intellectual proprietary rights in codified form. What is interesting with knowledge assets is that the more you structure, the more you codify knowledge, the easier it is to share that knowledge, both internally and externally…. Very structured knowledge can be shared in milliseconds via the Internet, whereas deep expertise or experience, it takes more time to share it with other people.”
Martin Ihrig, Professor in the University of Pennsylvania’s Graduate School of Education
Knowledge boils down to your people and this knowledge is developed in non-routine and highly creative type work. Contrast this to the bulk of most work which is routine and non-creative in nature. So is it no wonder that investments in knowledge are extremely low. Your knowledge assets take many forms: Your workflows, technologies, and communication. Take for example a Call Center Operation which touches your customers every day. So much of this knowledge never circulates up to Marketing, Product Design and other parts of the business.
If you want to develop knowledge, you have to connect all interested parties so they can leverage it. Your job should be to set aside time for capturing knowledge, sharing it, analyzing it and transforming it into intelligence for decision making. You need to identify all of the competencies that generate knowledge within your business – this includes not just the people, but the databases, survey results, reports, and other artifacts that house your knowledge. The real key in unlocking your knowledge assets is to fully understand what your knowledge workers are doing and how can we leverage this for higher levels of productivity.
It was summed up by Peter Drucker some 20 years ago; the most important work of a company is to increase productivity through the application of knowledge. In today’s connected world, we have an abundance of knowledge. If you look at how most companies manage knowledge assets compared to other types of assets, it is clear that most companies are not getting it right. Your time and investment in knowledge and how you leverage it should be one of your highest priorities. Once again, take a look at Google, Facebook or any other company that declares we are all about knowledge and you will see enormous value.
“Improving the productivity of knowledge workers through technology, training and organizational change….will be the major boardroom challenge of the next 15 years.”
--The Economist: Foresight 2020 - Economic, Industry and Corporate Trends