Knowlege Management

INTRODUCTION

At no time in history has the above corporate quotation been more relevant. It now needs a small modification, to wit:

Economists, educators, psychologists, corporate managers, government officials, and practically everybody engaged in a commercial venture, are firm in their conviction that we are in a "KNOWLEDGE AGE". They further aver that it is absolutely necessary that "our people" have KNOWLEDGE. Knowledge, if defined in an abstract way ((i.e.volumes in a library), cannot be applied to tasks. Knowledge must be in the minds of persons.and persons with particular knowledge should perform particular tasks.

The following notes outline a way to inventory knowledge in the minds of persons and, most importantly, use this inventory to find persons with knowledge as required for a particular task. These persons can then be assigned to tasks where their knowledge and skills are needed. A method is presented by which this knowledge can be identified, codified and evaluated.

CONVENTIONAL APPROACH TO KNOWLEDGE MANAGEMENT

Intellectual Capital has been the topic of extended discussion and many different approaches have been been proposed to define and evaluate it. Grant (Reference 1) states "knowledge is viewed as residing within the individual, and the primary role of the organization is knowledge application rather than knowledge creation". Hall and Jaffe (Reference 2) explore the "economic meaning of citation-based patent measures". Copyrights and names have also been discussed by Samuelson (Reference 3). Teece discusses the importance of intangible assets (Reference 4). Other approaches have involved accounting procedures. None of these writings, however, address the fundamental question: How is the knowledge of each person defined and used? This launches a huge, and erudite, debate.

AN OPERATING PREMISE

Rather than try to referee this debate, a simple premise will be stated; a premise that could not be implemented until the advent of massive memories in computers.

An excellent indicator of a person's KNOWLEDGE is an inventory of EVERYTHING that person has STUDIED.

The key word in this premise is INVENTORY. But how can knowledge in a person's mind be inventoried? Specifically, how can a knowledge asset be inventoried?

An accepted axiom is that knowledge comes from studying. It is a logical conclusion; therefore, that a label on knowledge in a person's mind can be a subject or subjects studied by that person.. Thus, if a person has studied algebra, the label of algebra indicates that some knowledge of algebra must be in the person's mind. We don't know its condition, we don't know if it is obsolete, we don't know if it's rusty, etc. etc. But we do know that there is some algebra in that persons mind.

So we start with labels of subjects that a person has studied. If we can date labels, we have an indication of whether the knowledge is obsolete. If we know how much a unit of algebra costs, we have at least a salvage value. In other words, a value of a knowledge asset can be defined.

An inventory of physical property is organized in a database so that a search can be made for a particular item, its location and its value. Concomitantly a database can be set up that lists every learning experience (box) which a person has taken, with each learning experience identified by subject matter (label). This database is searched for the location of that knowledge, i.e. persons who have studied a particular subject.

DOCUMENTING KNOWLEDGE

The basic question is: What method can be used to develop a database that defines personal knowledge? The conventional procedure is to test persons as to their knowledge of chosen subjects. This is an expensive operation and is limited in the number of subject matters that can be tested, to say nothing of the validity of the testing procedure.

This author recommends a different approach. He has established a basic premise, as stated above, on which a database can be established.

Based on the above premise, the first step in determining intellectual capital is to tabulate ALL education and training of persons. Schools from elementary through higher education maintain transcripts that list all subjects that a person has studied in each school. Each course/class that a person has taken is listed with credits and grades. These transcripts are the documentation of curricular or formal education.

But knowledge comes from sources other than schools and curricular institutions. Knowledge comes also from LIFETIME LEARNING and LIFETIME EXPERIENCES. Seminars, conferences, workshops, classes, on-the-job training, in-plant training, correspondence, etc,etc or other Lifetime Learning experiences are sources of knowledge. (Reference 5). In order to build a knowledge portfolio (inventory), all persons should make a best effort to recall their Lifetime Learning and write it down. Special computer software, the ERS FolioOne™ is now available which makes this possible. A special version of this software, KMI FolioOne , is on the Internet. Individuals list every learning experience in their own database. This database is a complete inventory of ALL education and training of a person. This is the start of a Knowledge/Skills Portfolio.

But establishing a knowledge inventory is more than just having a listing of every learning experience (both curricular education and lifetime learning) of an individual. It must also include lifetime experiences from which knowledge is gained. To enable systematic searching for persons with specific knowledge these experiences must be defined in terms of knowledge acquired. This information is entered into a topics studied field in FolioOne. This field can be searched, using specific criteria, to find persons who have the necessary knowledge to perform specific tasks. KMI FolioOne is the tool to develop, in database format, a person's Knowledge/Skills Portfolio.

Curricular education is documented on school transcripts. These list a class name, credits and grade. This author has devised a method by which Lifetime Learning experiences are evaluated. This is done by computing LIFETIME LEARNING UNITS® . (Reference 6). This numerical rating of a Lifetime Learning experience is computed by considering factors that describe the learning experience, using a special algorithm to compute the LLU© . Just as formal schools offer transcripts to every person, Lifetime Learning organizations can give their participants a Knowledge/Skills Portfolio, a record of personal accomplishments in both curricular education and Lifetime Learning (Reference 6).

EVALUATING KNOWLEDGE ASSETS

An inventory of knowledge of employees of a corporation is a valuable asset. Whether this asset can be placed on a balance sheet is open to question. As a first step, however, the cost of this knowledge asset should be determined. This is difficult. The cost of in-plant training is not always known. The tuition for an outside class and the cost of the employee's time are factors. Tuition charged by community colleges and universities range widely for the same type of class and therefore cannot be used to assign a value. Mere attendance in a class does not evaluate either the knowledge presented in the class or the knowledge the person received from the class. Some method is necessary to quantitatively evaluate both knowledge transmitted and knowledge received and to define the cost of the learning experience, regardless of what and where it occurs.

The LIFETIME LEARNING UNIT (LLU)© has been designed to accomplish these goals, i.e. assign an absolute value which includes cost and also a relative value Factors that are considered in the computation of the LLU (as tabulated in Reference 2) define the quality of a learning experience and are used in a special algorithm to compute LLU's. Student performance (grade) is a factor used in computing LLU's. If the student it not graded, the value of the learning experience is reduced. The LLU is therefore is a measure of the quality of a knowledge asset.

KMI FolioOne™ has special features with which the total cost of a learning experience can be recorded. Since the LLU is a measure of the quality and magnitude of a learning experience, a ratio can be computed of dollars per LLU. The number of LLU's acquired by an individual can be multiplied by an average $ per LLU value and a person's knowledge defined in dollars.

Unfortunately, in this time of galloping technology, knowledge grows obsolete. A life of a knowledge asset can be assigned, just as the life of a physical asset is assigned (most often this is done by the IRS). Accordingly, this corporate asset of intellectual capital is depreciated just as any other asset.

SUMMARY

A procedure and method of evaluating knowledge of persons in quantitative terms has been described. A means of evaluating this knowledge in terms of dollars has been presented. The LIFETIME LEARNING UNIT? is the basis for this evaluation. Finally a way of computing the number of dollars per LLU has been presented.

Individuals accumulate LIFETIME LEARNING UNITS during their entire lifetime, in addition to education and training in curricular schools. The sum of knowledge accumulated by an individual can be evaluated in dollars. The knowledge asset of a corporation is the sum of the knowledge assets of its employees. This asset may not be something that can be listed on a balance sheet, but a knowledge inventory is an important element in making policy and operational decisions.

REFERENCES

1. Grant, Robert M. "Toward a Knowledge-Based Theory of the Firm", Strategic Management Journal, Vol. 17, pages 109-122, 1996
2. Hall, Bronwyn H., Jaffe, Adam, "Market value and Patent Citations: A First Look", Working paper, Brookings Institution, 1998
3. Samuelson, Robert. J., "Meanwhile back on the Hill----". Washington Post, Sept. 17,1998
4. Teece, David J., "Capturing Value from Knowledge Assets", The New Economy, Markets for Know-how and Intangible Assets", California Management Review, Spring, 1998, Volume 40, Number 3.
5. Razak, Kenneth, "Lifetime Learning, A Path to a Career"; Education Data, Inc., Wichita, KS, 1996
6. Razak, Kenneth, "The Lifetime Learning Unit", Education Data, Inc., Wichita, Ks. 1996