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Measuring The Value Of Knowledge

Metrics for the knowledge-based business

David J. Skyrme

This report has now been superceded by Measuring Knowledge and Intellectual Capital. The information below is for archive purposes only.

The Measurement and management of knowledge-related assets has grown into one of the most important and challenging issues for today's knowledge-based business. In response to the increased pressure to measure and justify investment in knowledge programmes, a variety of new measurement methods have emerged.

Many of the knowledge leaders have now tried and tested not just one measurement system but a whole range, combining different measures and developing new and better methods for measuring intangible assets. Measuring the Value of Knowledge reviews and compares the new measures, analyses the successes and failures of their implementation within leading-edge organizations, and looks at their future development.

Building on the work covered in Chapter 4 of Creating the Knowledge-based Business, this new report provides an in-depth analysis of recent developments in thinking, methods and practical applications.

Published by Business Intelligence (May 1998), this report reveals:

  • Detailed coverage of all the key issues - the main developments in measurement thinking, methods and practical applications
  • Why you should measure your intangible and knowledge assets - external influences and recognition of the value of intangibles
  • How macroeconomic measures can guide business practices
  • How the different methods and models compare
  • How to use performance systems to manage intellectual capital performance - practical guidance on scorecards
  • The different types of intellectual capital measurement systems
  • How knowledge leaders justify their investment in knowledge management - making the case for knowledge management
  • What separates the winners from the losers - key success factors and practicalities
  • Future developments - in both the accounting arena and management practices within organizations.

The report outlines different approaches and gives practical guidelines based on the experience of a wide range of users.

What Readers Say

"The report is insightful and comprehensive. I enjoyed it and learned some new things from it. Yes I would recommend it to others."(Gordon Petrash, Dow Chemical).
"It is an outstanding contribution to the field of Intellectual Capital measurements. It is a very well researched, comprehensive book that is a must-read for any serious researcher of Intellectual Capital. David Skyrme has succinctly captured the state-of-art landscape of Intellectual Capital and explained the concept in a very lucid language." (Bipin Junnarkar, Director of Knowledge Architecture, Monsanto).
"While it may raise more questions than it answers, this is a well-researched report that succintly captures the stae of the art in this exciting, but embryonic field."(Victoria Mellor, Knowledge Management Review).


Chapter 1 - Introduction

Chapter 2 - Trends and Tensions
- Escalating Interest and Involvement
- Trends
- Tensions

Chapter 3 - The Pressure to Measure
Growing Irrelevance of Existing Measures
- The Fiction in Accounts
- The Widening Gap between Market and Book Value
- Is Microsoft worth five multinationals?
- The Problems Caused
- Saatchi and Saatchi - Intangible Losses preceded Financial Losses
Focus on Shareholder Value
- Shareholder Value Growth at Glaxo Wellcome
Growing Appreciation of Intangible Value
- Ernst & Young's Measures that Matter Study
- What is Important for Future Growth?
Good Governance Standards Trail Behind

Chapter 4 - Measuring the Knowledge Economy
National Competitiveness Indicators
- IMD and WEF Compete on Competitiveness
The World Bank
- World Development Report 1998
- Pacific Island Knowledge Assessment
Other Initiatives
- Massachusetts Innovation Index
- Canadian Accountants Focus on the Issues

Chapter 5 - Measures and Models
Different Types of Measurement Systems
Evolution of Measures
Value Based Models
- EVA and MVA
- Cash Flow Measures
- The Stakeholder Perspective
Valuing Intangibles
- Valuing Brands
- Valuing Patents
- Valuing Information and Knowledge
Performance Measurement Systems
- Balanced Scorecards
- Making Scorecard Theory Work in Practice
- EFQM (European Foundation for Quality Management)
- Variations on a Theme
- The Story so Far
IC Measurement Models
- The Skandia Navigator
- Intangible Assets Monitor (Sveiby)
- The IC IndexTM
- Inclusive Valuation Methodology
The Information Health Index

Chapter 6 - Practical Considerations - Developing An IC System
Preparing The Ground
- Skandia Update
- Grounded In Vision
- Multiple Levels: Linking Action and Asset Focus at Shell
- Performance Measures at the Bank of Montreal
Meaningful Measures
- Intellectual Capital at Nortel
Illuminating Indicators
- Edvinsson and Malone
- Enough but not too Many
- Approximately Right vs Precisely Wrong
- Forwards not Backwards
- Appropriate Processes
- Summary: What Makes Effective Indicators?
Focus on the Future
- Innovation and Growth
- Combinations not Compartments
- From Stock Monitors to Flow Meters
Best Practice Guidelines
Ten Conclusions from Research (Roos)
Case Study: Dow Chemical

Chapter 7 - Measuring the Benefits
- What the Knowledge Leaders Say
- Intranets: 1000% ROI?
- Booz Hamilton Allen: Return on Intranet Investment
Case Study: Skandia AFS

Chapter 8 - Pathways to the Future
The State of Play Today
- Pioneers of the New Accounting
The New Accounting
- Disclosure or Not?
- Standards or Not?
- Possible Scenarios
Future Developments
- Value: The Next Link
- Internal Markets
- Global IC Exchange
- New Management Skills and Systems
- Final Thoughts



Dow Chemical:
"Dow Chemical's approach to Intellectual Asset Management initially focused on patents. The systematic approach used combined with the TechFactor method of valuation, has helped them revitalise their patent portfolio and has generated over $125 million in advance revenues."

Skandia AFS:
"Through the efforts of Leif Edvinsson and his colleagues, Skandia AFS, have developed new intellectual capital measures that would also challenge managers."

Other Cases: · Glaxo Wellcome * Massachussetts Technology Collaborative * KPMG/IMPACT * OECD * World Bank * S.A.Armstrong * Saatchi & Saatchi * Shell * Bank of Montreal * Nortel * Booz Hamilton & Allen *

Bibliographic Details: Measuring The Value Of Knowledge, David J. Skyrme, Business Intelligence (1998)
Pages: 176 plus index. ISBN 1 898085 39 0

Now Even Better

Compared to the original (described above), our new report Measuring Knowledge and Intellectual Capital offers:

Fully updated content

  • Details of model enhancements - how pioneering models have evolved
  • Latest international IC scorecard data - 2002 results from comparative studies
  • Case study updates - latest developments at featured companies
  • Results of recent surveys and studies - key findings from 1998-2002 research
  • Validated URLs - over 100 validated and new resources
  • Addresses post-Enron implications - the new regulatory environment.

New and Expanded Coverage

  • New models - key features of over 30 knowledge measurement models
  • More cases - examples from over 35 organisations
  • Expanded guidance - lessons from cases, studies and experts
  • Additional sources, resources, and links - twice as many as the first edition.

Deeper Insights and Analysis

  • Unravelling the model maze - positioning and feature comparison tables
  • Critical assessment of methods - what's best where; pitfalls to avoid
  • Appraisal of research studies - relevance of academic research in plain language
  • Synthesis of experts' views - insights from the world's leading researchers and practitioners
  • Alternative perspectives - a balanced approach exploring different views.

Better Guidance

  • Synthesis of good practice - summary boxes highlighting critical success factors
  • Step-by-step processes - logical approaches to your measurement project
  • Checklists - things to check that your project is complete
  • Problem-solving - ways to work around common problems.

Further Details

Related Publications and Services

David Skyrme Associates provides consultancy services and workshops that provide more personalized knowledge on winning strategies and effective 'how-tos' for knowledge management.

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