Knowledge

Organizations managing intangible assets face an array of asset types. Understanding the nature of these intangibles can be important for accumulating and protecting the firm’s own resources and/or for targeting those of competitors. Basic information can be useful but is typically only operational, straightforward to manage, and often of little interest to competitors. From a value point of view, what is often the key asset is knowledge—applicable at operational, tactical, and strategic levels and potentially of great interest to competitors.

In the realm of intangible assets that may be of interest to organizations, knowledge has a fairly precise meaning. We all have a general idea of what knowledge is, but to employ it and protect it effectively, placing the concept in perspective and understanding its role as an individual and/or organizational asset, can be a great help.

Knowledge is often portrayed as part of a continuum of intangible assets, running from data through information, on to knowledge, and ending with wisdom. Data are considered bytes or items; once organized they turn into information. Information subjected to context, experience, or some similar processing becomes knowledge. So knowledge is understanding or know-how. Wisdom is a bit harder to define but has been referred to as “know-why” as opposed to knowledge’s “know-how,” suggesting a deeper level of understanding. In some more recent portrayals, especially in business studies, the level above knowledge is referred to as intelligence, with characteristics similar to wisdom but also bringing action and, often, a strategic level of decision making.

So knowledge is an intangible asset at some level higher than raw data or information. As noted in the definition, it is thought to come from learning, education, experience, or some other considered reflection. It can also be grown through sharing between individuals and/or organizations as well as through individual creativity or insight. The latter can come from combining existing knowledge in a new way, from analysis of data, information, or knowledge, or from other means of creation.

While growth in knowledge is typically an interest of both individuals and organizations, success in the process can depend on a variety of variables. Some can be related to the nature of the knowledge. One important distinction is whether knowledge is tacit or explicit. Tacit knowledge is hard to express, hard to explain, and, hence, often very personal. Explicit knowledge is easier to communicate and share. As a consequence, it can often be codified by writing it down or storing it in electronic form. The distinction is important if the knowledge is to be shared and, as we shall see, for choice of management technique. Other knowledge-related variables that can have an impact on how the assets are handled include the complexity of the knowledge and its stickiness or specificity (i.e., how tied it is to its original application or firm). Complex and/or sticky knowledge can be hard to apply to new or different circumstances. A pharmaceutical firm, for example, may have deep knowledge on developing a type of drug, optimizing production processes, and/or marketing and selling the drug given its relationships with health care providers and payers. But that knowledge, even if partially explicit, might be very difficult to transfer to another company, production process, or new drug, given the complexity of circumstances and specificity of the knowledge.

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