A System Approach to Knowledge Creation and …...A Holistic Approach Helps establish goals and...
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A System Approach to Knowledge Creation and Valuation (Business Reasoning , Analytics & Instructional Network) Dr. Annie Green The George Washington University 5/15/2012
Transcript of A System Approach to Knowledge Creation and …...A Holistic Approach Helps establish goals and...
A System Approach to
Knowledge Creation and
Valuation (Business Reasoning , Analytics & Instructional Network)
Dr. Annie Green
The George Washington University
5/15/2012
Why Knowledge Management?
Knowledge is fast becoming a
primary factor of production (e.g.,
Handy, 1989, 1994; Peter, 1993; Drucker, 1992)
Intangible assets have
surfaced as a major player in
the market valuation of
today’s business enterprise.
However, no standardized,
consistently agreed upon
method exists to account
for intangible assets in a
business enterprise
Why Knowledge Creation & Valuation
What is the driver for the need to account for intangible assets?
Why is there a need to account for intangible assets?
Intangible assets account for 70% of the value of a business enterprise and they are
not adequately represented in current accounting methodologies (GAAP).
There is increasing discrepancy between the market values of many corporations
and the values of their shareholder equity when measuring their book value in
accordance with GAAP. For every one dollar on a companies books, there are at
least five dollars unaccounted for.
We are in the information age, which is dominated by service
Services have increased steadily as a share of measured total output in the economy and
the delivery of high-end skilled services and professional services involves substantial
input of intangibles.
Capital accumulation has more than doubled in the last 10 years and the bulk of this
growth is attributed to information technology
Why Knowledge Management? Why Account for Intangible Assets
Engineering Knowledge Creation &
Valuation
An Engineering Model that decomposes
knowledge components such that we
can monitor vital signs that indicate
risks of success or failure in decision
making.
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A Holistic Approach
Helps establish goals and decision-making that is based on what organizations know or need to know to be successful.
a holistic approach realizes that individual changes can affect other components, as they function as a whole.
the evolution of knowledge is a complex system that must be engineered such that we can create stochastic models and be agile in our decision making.
knowledge provides us a basis to make decisions under increased certainty that our expected outcome will be achieved.
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All too often, we move forward with just a single piece of a
puzzle
Framework of Intangible Valuation Areas (FIVA) provides a
structure for an organization to map its value components to a
specific value driver
Business Enterprise Value Sources
Sources of Non-Financial Indicators and Indices
Balance Scorecard Models
+
= Initial Integrated Set of Sources of Intangible Assets
Business Enterprise Value Sources
_ Redundancy
= COMPETITOR CUSTOMER EMPLOYEE INFORMATION PARTNER PROCESS
PRODUCT
/SERVICE TECHNOLOGY
Framework of Intangible Valuation Areas (FIVA)
To define and codify common principle valuation sources of intangible
assets for use in enterprise valuation practices
Synthesis of Models
Valuation Components
The economic value that results from:
Customer - associations an enterprise has built with consumer of its goods
and services
Competitor - position an enterprise has built in the business market place
Employee - collective capabilities of an enterprise’s employees
Information - ability to collect and disseminate its information and
knowledge in the right form and content to the right people at the right time
Partner - associations and enterprise has established with external
individuals and organizations in pursuit of advantageous outcomes
Process - ability to leverage the ways in which the enterprise operates and
creates value for its employees and customers
Product/Service - ability to develop and deliver its offerings that reflects an
understanding of market and customer(s) requirements, expectations and
desires
Technology - hardware and software and enterprise has invested in to
support its operations, management and further renewal
Capacity (Measurements and Indicators)
Capacity Drivers •Resource Capability •Baseline Capacity Measures •Capacity Deployment •Capacity Utilization Measures •Time Frame of Analysis •Organizational Focus and Capacity
Intangible Valuation Components
Framework of Intangible Valuation Areas
(FIVA)
COMPETITOR CUSTOMER EMPLOYEE INFORMATION PARTNER PROCESS PRODUCT
/SERVICE TECHNOLOGY
Body of Intelligence
Operational Data Bases
(Financial &Non-Financial)
Evolution of Value
COMPETITOR CUSTOMER EMPLOYEE INFORMATION PARTNER PROCESS PRODUCT
/SERVICE TECHNOLOGY
Framework of Intangible Valuation Areas (FIVA)
Intelligence Representation
Intelligence Capture
Knowledge Assurance
Knowledge Capture
Knowledge Retention
Knowledge Transfer
Knowledge Utilization
Knowledge Evaluation
Knowledge Representation
INTELLIGENCE
KNOWLEDGE
LEARNING
CHANGE
Enterprise
Goals/Objectives
Performance
Measurement
Intelligence
Knowledge
Learning
Change
Innovation
Intellectual Capital
Intellectual Assets
Intellectual Property
Evolution of Value
Theoretical Model of Intangible Valuation
A holistic approach using the following components: System – construction maps that detail the coherent picture of the value components that
drive the performance.
Cognitive – identification of value drivers that support the understanding and construction of mental models that make sense of the education system and what guides the decisions and actions of the decision-makers.
Intelligence – a view of negative and positive impacts on performance based on a body of information from which knowledge can be obtained to questions by inquiries, predictions, explanations and prescriptions for control.
Knowledge – building of formal models based on rules or principles prescribing a particular course of action.
Learning – accumulate and analyze information in the form of knowledge aligned with activities that may be well or badly performed.
Change – support inquiry that results in thinking and acting that yields profound inner shifts in people’s values, aspirations, and behaviors and outer shifts in processes, strategies, practices, and systems.
Performance Measurement – measure success factors from different perspectives, as well as perspectives of past, current, and future performance.
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Theoretical Model of Valuation System
Concept – building blocks of the components of valuation.
Structure – relationships and orderings that exist between and amongst
business concepts and the language and symbols which represent them.
Language – internal representation of data and external communication of
value.
Data Retrieval – interfaces to external and internal data.
Logic Models – transformation of business functions/conditions into a form
that represents objects in the real business world.
Pattern recognition – identification of similarities among differences and
differences among similarities.
Knowledge Representation – transformation of knowledge into a business
fact.
Hypotheses – formulation of facts from relationships and orderings.
Evidence – validity.
Nine Characteristics
Indicators & Measures (Database) – facilitates the capture of indicators and
measures, known as capacity, to form a body of information.
Intelligence Models (Logic) – uses the body of information to cross-pollinate
value drivers and construct a body of intelligence.
Knowledge Models (Logic) – uses the body of intelligence to identify events
that can be symbolized and manipulated to determine a course of action.
Search & Retrieval – the use of classification technologies to retrieve, filter,
and manage information in computers.
Security (Access and Rights) – ensuring intelligence and knowledge has
adequate protection from intrusion.
Interface (Reports, Scorecards, and Dashboards) – visualization software
that helps organizations view information, intelligence and knowledge in
graphical form and perform analytics.
Six Technology Based Components
The Education BRAIN (Business Reasoning, Analytics & Instructional Network)
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Instructional Network
The Thinking Organization (Business Reasoning, Analytics & Instructional Network)
Capture Current
Measures,
Retain Past Measures,
Evaluate Value Added,
Implement Improvements,
Realize Performance
MEASURE WHAT IS OF VALUE/MEANINGFUL
BALANCED-SCORECARD
EMPLOYEE GROWTH/LEARNING
ORGANIZATIONAL GROWTH/LEARNING
CUSTOMER SATISFACTION
KNOWLEDGE CONTRIBUTION (PATENTS, NEW
INITIATIVES, REDUCED TIME-TO-MARKET,
ETC)
IMPROVED CORE PROCESSES
Measure the Value of Intangibles
A framework for organizing and a structure for surfacing intangible
asset measurement and performance indicators.
Identification of a discrete set of common value drivers of intangible
assets through field research.
Presentation of a view of intangible asset management within the
context of the business enterprise value chain.
A common set of business dimensions to construct and economic
KM business model
Definition of an evolutionary path that can serve as a base case by
which a business can measure its intangible asset management
position and progress.
Identification of leverage areas to provide a business with strategic
focal points.
Validation of existing IAM models.
Identification of limitations and opportunities for future research and
applications.
Conclusions
Conclusions
Business could benefit from a holistic approach to establishing goals and decision-making based on what it already knows or needs to know to be successful.
The BRAIN model identifies, validates and synthesizes measurements & indicators from a discrete set of common business value drivers that can be used to improve organizational performance.
This approach is a reconciliation of theory, practice and perception in business.
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"We can't solve problems by using
the same kind of thinking we
used when we created them."
…Albert Einstein
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We Need to Change Our Way of Thinking
to Achieve Excellence in Business
“Knowledge has to be improved,
challenged, and increased
constantly, or it vanishes."
…Peter Drucker
