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5.0 out of 5 stars Stewart demonstrates he has intellectual capital too, March 6, 1999
This review is from: Intellectual Capital (Hardcover)
Knowledge is the currency of the information age. The sudden ubiquity of information technology is considered by the author to be the biggest story of our time (p. xvii). He may just be right; and while information is not alone sufficient to constitute knowledge, this discussion goes way beyond the current platitudes of transforming data into information and, in turn, into knowledge. The author considers such arbitrary distinctions a tar baby (p. 71), a place to get stuck. He implies (but does not explicitly state) that knowledge is constituted by bringing a framework, structure, organization to experience, what is called "content" in the age of internet computing. Such knowledge includes the expertise that grows up in a community of practicing experts around a task, person, or organization as well as the tools (networks and databases) that augment that knowledge (p. 71). For example, in the knowledge economy the flow of information is as important as the flow of good and services and, to some extent, interchangeable. The inventory of goods required to be ready to hand to address customer purchases can be reduced by an accurate inventory demand forecasting system in a victory of information over inventory (p. 26). Physical assets are being replaced by the networks and databases -- structural knowledge capital -- in the generation of economic value. Information technology has an essential facilitating and enabling role to play in each of the three forms of knowledge capital identified and discussed by Stewart. To this reader, though perhaps not to many business and technology managers, the first kind -- human knowledge capital -- is the least interesting of knowledge assets. Round up and insert here all the usual suspects in stories of dumb companies that try to treat their workers like interchangeable cogs in a mechanisms. Compare these with smart companies that promote employee stock ownership, empowerment, and professional development. The dilemma remains the same. If the employee leaves, so does his or her ability to solve problems for the organization. True, you can make a persons miserable with legal documents and corporation counsels;what you can't do is make them loyal that way. The author's original insight here is that the loyalty is often to the community of practice -- professional organizations of knowledge workers (network specialists, database specialists, etc., by analogy with doctors and lawyers). Really smart companies create communities of practice as knolwedge exchanges, technical advisory groups, and writing workshops. More significant is structural knowledge capital. The framework for this is information technology. The example of the inventory system substituting for product on hand on the floor of the warehouse belongs here. Also included are various ways of bundling information with products -- as when the documentation accompanies the product on a CD ROM disk -- and of products that are themselves essentially information content (digital informational entertainment and services). Although this includes the traditional repertoire of patents, copyrights, trade secrets, and intellectual property in the narrow legal sense, these are a drop in the bucket. Group here the initiatives one can read about in the business and trade publications being driven by the big six consulting organizations in building "knowledge xchanges," wide area databases of technology and industry specific methods and practices of solving problems.The most original insight is to think of customer relations as knowledge capital. Once again these relations are enhanced by connecting with the customers through networks and works flows enabled by technology, presenting the competition with barriers to market entry and costs of catch up. Throughout the discussion, the author argues persuasively that a switch has occurred from information supporting the "real" business to information being the business (p. 165). This method is fundamentally different than squeezing suppliers and distributors to increase the companies own profit margin. The question to ask rather is our share of the customers business growing as fast as their business is growing. If so, then a win-win process is underway. The author conclusions with chapters on the economics of information as well as a useful appendix on measuring and managing intellectual capital. Unlike physical assets, knowledge is nonsubtractive. It can be sued again and again without being consumed, used up. It seems to qualify and limits (if not flat out contradict) the fundamental principle of economics, the law of diminishing returns. For example, once a substantial up front cost is incurred in constructing a software product, the costs of reproduction and distribution (though perhaps not of maintenance and support) are relatively minor. There are no diminishing returns in sight. My obtaining a piece of knowledge in no way diminishes your ability to obtain it too. What does occur, however, is wholesale obsolescence as the rate of technological changes (one of the fundmaentla drivers of macro-economic growth) creates legacy systems at an unprecedented rate. The audience for this book is business and technology professionals who want to understand the interplay between economic growth and information technology in a broad sense. The style is journalistic and suitable for the nontechnical reader with an interest in the economics of information and knowledge. The author's rhetorical flourishes, characteristic of such publications as Fortune magazine where the author is a writer, are well-balanced with incisive argument and a substantial marshalling of data and evidence. The footnotes are scholarly and are a useful supplement to readers who wish to drill down into the intellectural content behind the headlines. There is no index. Stewart makes a signficant contribution and demonstrates a masterful grasp of his material, which makes him very knowledgeable indeed. -- excerpt from my published review in Computing Reviews, December 1997
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