MEASURING AND MANAGING THE KNOWLEDGE IN THE INTANGIBLE ECONOMY
Updated: Oct 25
In the Digital Economy the Firm Knowledge is everywhere at every moment. The knowledge transmission support can be tangible (CD disk algorithm draw, document or file) can be loaded in a digital device, machine, computer, can circulate by wire, networks.
Knowledge like business asset & value is generated by the Human during his business activities.
All the Firm activities are starting with a knowledge base. The best Foundation for the start-up Company’s is the quality and business pertinence (financial performance) of the starting knowledge and its degree of competitive advantage on the market, so the best first investment is buying innovative deep knowledge and entrepreneurship.
This primary knowledge will be developed and distributed during the Company process activities. The activities don’t need to be chained but is essential to be nurturing with the “Knowledge Engine”.
What is a “Knowledge Engine”? Is a knowledge object with drill (vertical) and expand (horizontal) capabilities on multi knowledge layers and depths surrounding the main business domain responding to the business goal which is “improving business process “?
Like a small example, if we consider AI techniques useful to optimising the business process modelling. The Business domain will be “optimising business process modelling “Knowledge Object” will be “Knowledge Process Optimisations” and we will set-up a “Knowledge Engine” which is “AI techniques optimising business process modelling” to search the documents, drawings, research, publications, technologies, every knowledge representation to collect and consolidate the knowledge related to the business goal” optimising the business process based on different criteria, cost , execution time, competitive advantage, environment, social, (... ). We need AI to model the process, because the “goal -process” in not planned is rather opportunistic(smart) and Agile (not fix model).
The Knowledge Engine, Drill & Expand functionalities will make able to discover new related knowledge, improving the initial root of knowledge “AI business modelling”. The condition to accept the new discovered knowledge is his “value contribution” to the Company Marginal Value responding to the improving the business process for products and services through better Financial Marginal Value(1);
The initial root of knowledge “AI business modelling” and the different branches can be consolidated like one intangible asset and better valued, can even cover activities being bundled like a group of activities existent in the Firm process chain linked to the company business goal.
The knowledge expansion is direct related to the knowledge depth exploration, for each profusion level, will exist a knowledge expansion surface collecting the knowledge correlated with the mining level. The Knowledge Engine can be a robot but his algorithm driven activity must be monitored by Human to filter the findings and make algorithm corrections.
The knowledge depth mining and surface exploration from the Knowledge Engine will be correlated based on the business performance algorithm or the derivative ones from the company main business goal.
The main knowledge asset and the derivative branches plus all the knowledge assets related to the same root, will appear like a knowledge aggregated asset in which the proportionality between the branches and roots are given by the Value flows regarding the Company marginal business value.
Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximise their potential profits.
The marginal intangible value(2) of the enterprise contains the measurement of the intangible contribution of knowledge as an impact on the intangible asset of the enterprise. The knowledge contribution transmitted to the Company VC (Value Center)(3) is a source of intangible business value for the Company and the Total Intangible Values Contributions (TIVC) constitute a KPI (Key performance indicator) to measure the impact on the business added value created in the company.
The more business impact an intangible value contribution has, the more value units will be assigned to the contribution by the peers of the recipient value center.
The value appreciation will be directly linked to the business complementary business value at the Company level and can be expressed in monetary units, or equivalent business units like: number of produced objects, increase in sales price, or business volume exchange with a partner, or new competitive advantages criteria on the product or service.
The Knowledge Engine’s will populate ALL Company Strategic Value Creation Centers around the different Firm Business Value-Chains Each component of the Company Main Business Goal can have his Knowledge Engine developing more business value knowledge and knowledge assets correlated with the company financial performance
The Human assisted by computers and machines focusing on the activity business goal will mine and drill through many knowledge levels to extract the deep knowledge, but also to expand the knowledge level surface. The primary knowledge will be the initial business goal, but immediately after, the branches coming out will be deep mine and expand the knowledge levels, so others knowledge objects which will be linked to the primary root.
The Human will perform an “augmented view” of the business object knowledge and involve a lot of Concentration on the missing knowledge areas to fix the business object.
Concentration means accelerating reasoning, multiple interconnections and new perspectives. This knowledge value centers are like the Brain Neuronal and the connections between the “Value Center” like the Neural Network of the Firm Brain(4). The quality of the intangible asset “organisational capital “will be the guaranty of the knowledge quality.
The Knowledge is for the Firm like the blood for the Human Body he contains all the necessary stimulus to develop and growth the Company Total Business Value. If in the normal financial reporting we introduce KPI’s linked to the knowledge Firm production, content and knowledge distribution, will be equivalent with the basic Human Medical Check-the blood test.
The Neural Company Network is the center of the Company business creation process the structure is based on the Company Value Centers linked by workflows or just “links” two-ways able to transmit any kind of content based on a transmission protocol with acceptance and value negotiation like a handshaking communication protocol.
The Value Center contain the Knowledge Engine and the already created knowledge assets consolidated like a library of similar knowledge assets.
The Value Center (VC) produces the “Intangible Value Account” corresponding to all the “Intangible Assets” contained within the Value Center”, but also the “Intangible Values ” valuations obtained for the Intangible Assets already “Negotiated. We thus obtain a first creation of an accounting balance sheet of knowledge and Balance sheet with "Debit" and "Credit".
The “Sold “is the indicator if the Value Center is generally “Knowledge Intangible Value Creditor” or “Debtor” to the Company Total Intangible Value .
All this Neuronal Network and the “Neurons” VC are the most important Company Structure and is treat like the Intangible Asset with the most business impact for the Company Resilience and Market Value Potential.
This Neuronal Network must be “liquid” that makes them flexible to change and adapt instantly.
MIT researchers have developed a type of neural network that learns on the job, not just during its training phase. These flexible algorithms, dubbed “liquid” networks, change their underlying equations to continuously adapt to new data inputs. The advance could aid decision making based on data streams that change over time (“Liquid” machine-learning system adapts to changing conditions | MIT News | Massachusetts Institute of Technology)
This “collecting & extracting “Phase will be followed by the “Consolidation & Evaluation” Phase.
Each Collected information will be evaluated by regard with the Firm business goal and valuated proportional with the “generated marginal business financial value “, on the company market, in order to make this possible the Knowledge Assets must be Consolidated in significant knowledge fragment covering an activity in one segment
Intangible Asset Consolidation(5) means to integrate different assets by regard on their nature: knowledge, competence, partnership, under the primary business root The Consolidated Asset has a sum of the characteristics which includes the main characteristics of each consolidated asset.
The reason for a Consolidation is to complement the business utility of the asset for a better financial valuation of the aggregate asset, improving Drilling depth and Expansion area of knowledge applicability domain
The next Knowledge Management Phase is the Valuation & Distribution of the Knowledge Assets (7).
Valuation of the Knowledge Asset means finding all the knowledge asset use in all the company activities. But finding means obtaining a value units estimation for the Knowledge asset marginal financial value or just business value.
The tremendous quality of the intangible asset is that its value is unlimited so we don’t need to exchange it to its maximum value one’s but many to any kind of value. The total value for an asset is the sum of all traded values and it can be big if we distribute it in many places in the Firm.
The Spread of Knowledge value(6) is an important KPI for the Knowledge quality and value, and can be used to judge the Firm capacity to adapt and develop Business, or to be Resilient.
And finally, knowledge must be converted into competence to create the coherent basis for bringing all knowledge into production at its marginal financial value. The conversion of knowledge into competence will be done in the competence value center (VC) as in our time the universities fulfil this task, they convert research from any source and even their own research center into course program for students, transforming knowledge into National Financial Wealth.
The Competence Value Center is like Knowledge Value Center a conversion Engine where Robots have little place to day AI technology, but later the controls and corrections can be AI based on RPA (Robotic Process Automation). The actual stade of technology in the new working at-distance machine interface will achieve rapid transfer Knowledge-RPA-Competence progress and loading much competence in the machine: driving, installing, cooking, sailing, medical tests(...) the machine will be able to judge alone (arbitration) and predict better (intuition) so we have the time to be more creative.
The competence quality is not only a question of the knowledge quality is a matter of judging the execution feedback and correction precision.
The conversion from knowledge to competence must be fast if not we lose the” the Financial Marginal Value of Knowledge”, so the circulation from many KVC (Knowledge Value Center) to very many CVC (Competence Value Center) through the Company Neural Network (CNN), must be done on “THE PLATFORM” like the biggest digital companies are already doing today.
The “Conversion cycle frequency “(8) between Knowledge and Competence is an important KPI for the Company Intangible Market Value.
Is this simple? NO, it takes many years or decades to build -in- platform the thousands of procedures, business rules able to: detect the right information, to Extract it and to Consolidate it in comprehensive Knowledge Assets.
The Company Neural Network (CNN) must be trained to Evaluate well the Value Contributions (if not we lose Financial Marginal Value) and to be reactive in the estimation of the useful of the value contribution to the many thousands existing intangibles assets.
We must clearly understand that the HUMAN is in every Company Value Center and his activity in every moment is to developed and correct this HUMAN-PLATFORM co-working and Knowledge transfer.
The Companies Must Start building the NEW Knowledge Management System based on the close relation between the Human and the Machine if not they will lose business, and is not the old ERP system that can save them.
(1) Financial Marginal Value
(2) Marginal Intangible Value of the enterprise contains the measurement of the intangible contribution of knowledge as an impact on the intangible asset of the enterprise.
(3) The Value Center (VC) produces the “Intangible Value Account” corresponding to all the “Intangible Assets” contained within the Value Center”, but also the “Intangible Values ” valuations obtained for the Intangible Assets already “Negotiated” "", We thus obtain a first creation of an accounting balance sheet of knowledge and Balance sheet with "Debit" and "Credit".
(4) The Company Neuronal Network is obtained by networking the Company VC’s
(5) Intangible Assets Consolidation means to integrate different assets by regard on their nature: knowledge, competence, partnership, under the primary business root The Consolidated Asset has a sum of the characteristics which includes the main characteristics of each consolidated asset.
(6) Spread of Intangible Value is an important KPI for the Knowledge quality and value, and can be used to judge the Firm capacity to adapt and develop Business, or to be Resilient .
(7) Valuation & Distribution of the Knowledge Assets.
(8)Conversion cycle frequency between Knowledge and Competence is an important KPI for the Company Intangible Market Value