|A-Z of Knowledge Management
A is for Assets Assets and value are at the core of knowledge management theory. The clearest general definitions of knowledge management state that KM is the deployment of knowledge to add value to the enterprise. Supplementary definitions might speak of using knowledge systematically to further the strategic objectives of the organization.
One of the core puzzles of knowledge management is how to define the value of knowledge assets. Capitalist models of business define assets only in tangible, quantifiable terms. Even share value, which is subject to the very intangible influences of market confidence, can conveniently have their intangible risks forgotten, and be given a dollar price at any given point in time. Much of the debate surrounding knowledge management theory is about how to assign tangible value to intangible knowledge assets, much of which resides in the heads of key employees (see Tacit Knowledge).
One of the favored (because simple) models is to state that the actual value of knowledge assets is equivalent to the difference between the book value of an enterprise and the market value of the enterprise. Proponents point to the enormous differential between book value and market value in internet, e-commerce and software companies to justify this claim. A logician would find gaps in reasoning here it seems counter intuitive to assign tangible value to intrinsic assets based wholly upon extrinsic (and intangible) opinion. The debate is, however, far from over, and various measurement models of greater and greater complexity (requiring high consulting fees for their application) are being developed. It is a critical issue: if knowledge projects, processes and products are to attract investment and be properly managed, tangible value needs to be assigned, predicted, and measured.