Harnessing Knowledge

By Donlon, J. P. | Chief Executive (U.S.), March 1999 | Go to article overview

Harnessing Knowledge


Donlon, J. P., Chief Executive (U.S.)


For every $100 invested in shares of Microsoft or Intel, only about $1 represents physical assets. Clearly, the real value of today's companies is not captured in traditional net worth accounting.

n his influential 1992 book, The Twilight of Sovereignty, former Citicorp chairman Walter Wriston observed that "the new source of wealth is not material, it is information, knowledge applied to work to create value." John Seely Brown, Xerox's chief technology officer, argues that we are moving from a production economy to a digital economy where instead of transforming material, companies are transforming knowledge. He sees three manifestations of this: Leaming will replace unlearning; instead of making products, most will make sense to the customer; and instead of whitecollar or blue-collar workers, we all may be wearing T-shirts. So what is this "knowledge economy" that management pundits and the business press claim will reshape corporate fortunes? And how can business leaders make use of it?

There is a fundamental confusion about what is meant by "knowledge." Skandia, the Swedish financial services firm, defines knowledge capital as the sum of human capital, the combined knowledge and skills of one's employees, together with the values and culture of the company; and structural capital, the hardware, software, brands, patents, and structural capabilities that support one's employees and customer relationships.

"If information is unorganized data, undigested observations, and facts," Harlan Cleveland wrote in The Knowledge Executive, "knowledge is organized information, internalized by me with everything I know from experience or study or intuition, and therefore useful in guiding my life and work." Knowledge is integrated with everything you know in such a way that it guides one's action. It confers advantage by enhancing one's ability to take action. Knowledge capital depends on people to create it, but also for a management process to harness it in some value-creating way. Participants in the following roundtable, held in partnership with Arthur Andersen, more or less embraced the latter meaning. Simply, knowledge is a resource that enables other things to happen.

Unlike other assets, knowledge doesn't diminish with use, The greatest cost is in its creation rather than its distribution. Users can benefit from knowledge as well as increase its value through contact and adapting it. Harvard Business School's James Brian Quinn writes that "the capacity to manage human intellect-and to convert it into useful products and services-is fast becoming the critical executive skill of the age." The question roundtable participants wrestled with is, how is this best done? One can create knowledge hoping that transfer mechanisms will take it from individuals to groups. At Enron, for example, CEO Ken Lay says that in the energy industry one must always be prepared to reinvent the business. He thinks in the next 10 years, more than half of Enron's revenue will come from lines of business it does not have today. Lay tries to maintain a knowledge sharing environment where lines of communication are open and new ideas are given a wide berth-even if many don't work out.

Arthur Andersen's Steve Samek believes that CEOs must ask themselves, which assets are driving the value today that perhaps you didn't recognize before? As Pat Sullivan of ICM Group adds in the following discussion, these assets by themselves are insufficient until they are harnessed to complementary hard assets and a process that converts an innovative idea into a salable product or service. If the necessary process or structure is not present to do this, consider an alliance with a company that can offer one.

DATA INTO KNOWLEDGE Steve Samek (Arthur Andersen): The bottom line question is, what is the embedded knowledge capital in your business and how can you convert it to a real revenue stream?

For some companies that have done recent acquisitions, the largest asset on the balance sheet may be intangible. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Harnessing Knowledge
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.