Insight No. 26

 
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K-commerce:
profiting from knowledge
 
   
No. 26
Contents
 


What Is It?

Benefits

Packaging

Strategies

Inside-Out

Examples



The focus of many knowledge management initiatives is inwards, such as sharing best practice. However, given proper attention many companies can develop new revenue streams by packaging and trading unexploited knowledge assets. The growth of the Internet, and particularly ecommerce (se Insight No. 23 on Internet Commerce) is leading to the emergence of knowledge markets, that is lowering the cost and increasing the market reach for trading knowledge. This Insight considers the different ways in which enterprise knowledge can be more effectively exploited.




What is K-Commerce?

K-Commerce (Knowledge Commerce) is the trading of knowledge in a variety of forms using electronic networks. Although knowledge is already packaged and traded, as in the case of licenses for patent exploitation, the use of the Internet creates many for opportunities for profiting from investment in knowledge development.

K-Commerce represents a convergence of practices in four areas:

  • Knowledge-intensive products and services - augmented by a growing focus on more effective knowledge management
  • The Internet - as a strategic business opportunity - allowing knowledge providers to reach audiences on a global basis at low cost
  • E-commerce - the ability to carry out automated transactions 24 hours a day, 365 days a year; this is particularly attractive for selling explicit knowledge which can be downloaded by customers for immediate use
  • Marketing - developing closer understanding of customer needs and building up one-to-one customer relationships; again the Internet is helping to improve the quality of relationship marketing.



Opportunities and Benefits

By deliberately creating knowledge-intensive products and services, and using the Internet as a marketing vehicle, the following benefits can be achieved:

  • Differentiation - Many 'me-too' products lead to commoditization of markets, where price becomes the only decision factor. Enhancing products and services with unique knowledge creates a competitive edge and also creates opportunities for premium pricing
  • New Revenue Streams - Much knowledge gathered during product development is filtered out as product decision are made. By reviewing with a new perspective knowledge left on the shelf (or indeed from routine business processes where information and knowledge is a by-product) it is often possible to find new packages or combinations that are markets in their own right.
  • Increased Return on Investment in Scarce Skills - By packaging some of the tacit knowledge of your experts, it is possible to deliver it to a wider audience than if limited to the time availability of those experts.
  • Identification of New Opportunities - The relatively low cost of packaging small amounts of knowledge and making available over the Internet makes it easier to gauge response and interest for potential new knowledge lines
  • Reduced Marketing Costs - The Internet offers far greater global reach than could be achieved by conventional face-to-face marketing methods often needed for the sale of complex knowledge-based products and services.
  • Greater Market Reach - Distance is no object. Sending information or exchanging messages costs virtually the same as someone locally. You don't need to pay expensive courier bills.



Packaging

Even a company that sells physical products probably has a wealth of unexploited knowledge in the 'product surround', those intangibles that make the product attractive to users. This is likely to be knowledge of markets, applications, underlying technologies and business processes. Such knowledge may be offered in the form of implementation, training, and consultancy services or in various add-on products such as user guides or software.

The opportunities for commercialization can be enhanced through packaging. This involves some form of codification from tacit knowledge to knowledge in a more explicit form such as in documents, databases and computer software. What starts as uncodified knowledge, often a set of ideas, is gradually shaped through dialogue and expression into something more tangible

Much knowledge in organizations is neither explicitly codified nor commercialized. Thus many knowledge management initiatives identify important tacit knowledge, held by a few experts, that is capable of codification and would benefits many other people. In general, the greater the degree of codification of knowledge the more easy it is to reproduce and disseminate, especially if advantage is taken of the Internet.




Successful Strategies

The emergence of ecommerce and knowledge markets is new that there is no simple cook-book of winning strategies. You only have to consider what were seen as "crazy ideas" in the knowledge economy only a year or so ago, such as giving free Internet access, or allowing customers product reviews to be publicized without any vetting. However, there are some guidelines that are likely to stand the test of time:

  • Act fast, refine later - time-to-market is of the essence; avoid analysis paralysis and lengthy debates over potential returns

  • Build on existing knowledge initiatives - an information audit or knowledge inventory, in particular, will identify and validate knowledge that may have particular good market potential

  • Build an effective web-site - concentrate on content rather than technology wizardry; see for example The Good Web Guide

  • Observe the market closely - use two way mechanisms to gain customer feedback, review competitor activities, look at how knowledge is sold in unrelated markets; you need good monitoring to keep abreast of developments

  • Investigate what the large consultancies are doing - after all their primary assets are knowledge, and you can bet that they are seeking every way possible to exploit it (see examples)

  • Add the human touch - many packagers simply offer codified information, totally automate their business processes, and generally make it difficult to talk to a person. Make it easy for your customers to email you or talk to you via phone or videoconference; consider creating a network of subject matter experts as part of your product offering.



Inside-Out

Almost every activity that is carried out as part of a knowledge management initiative can, if though about properly, give rise to an external commercialization opportunity. For example, the practice shown on the left below can be turned into products and services shown on the right:

  • From Best Practice Sharing To Best Practice Databases
  • From Expertise Directories To Consultancy Teams
  • From Intellectual Assets To IPR (licenses, patents etc.)
  • From Intranets To Extranets
  • From Domain know-how To Expert Systems, Consultancy
  • From Communities (internal) To Membership Communities
  • From Customer Knowledge To Customer Databases
  • From Knowledge Centres To Advisory Services.

Many organizations are now realizing this potential and as well as developing knowledge-based products and services are exploiting the results of their internal knowledge management initiatives, as the examples below indicate.




Examples

Examples of the different ways in which organizations are commercializing knowledge and gaining the benefits of k-commerce are:

  • IPR - Project Alba, a consortium involving IBM, Cadence and Scottish Enterprise, has developed an online market where IC design elements are licensed. It allows systems developer to check if functional components already exist, thereby saving development time and avoiding possible IPR infringement.
  • Consultancy - Ernst & Young have turned some of their knowledge into a paid advisory service - ERNIE. Users can pose questions and get answers from he most appropriate expert
  • Consultancy - Arthur Andersen make available to clients their Global Best Practices database. Other knowledge has been packaged into the InterAct learning Series™ of CD-ROMs.
  • Ford are licensing out the methodology that they developed for sharing best practices, which was part of an internal knowledge management programme
  • Teltech Resources is offering a range of services based on their network of experts. Based on thier experience they have also generated a new line of consulting in knowledge management..

© Copyright. David J. Skyrme. 2000. This material may be copied or distributed subject to the terms of our copyright conditions (no commercial gain; complete page copying etc.)


See also the related Insight on Internet Commerce. There is also a paper (Word for Windows format) on the wider knowledge economy and a presentation on this topic. Also relevant are a series of I3 UPDATE articles on the 7Ps of Internet Marketing, starting with Portals. Also check the K-Commerce Contents list. Go to Insights - List of Titles for full listing of other Insights on this Web site.


Back to: Top - What Is? - Benefits - Packaging - Strategies - Inside-Out - Examples - Feedback


Management Insights are publications of David Skyrme Associates, who offers strategic consulting, presentations and workshops on many of these topics.

Additional coverage of these topics can be found in our free monthly briefing I3 UPDATE/ENTOVATION International News, various articles, publications and presentations.


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