A Flat Knowledge Base Produces Flat Income Streams...

Many small companies, and even some large ones load their knowledge base with worthless data. They do so because data storage is cheap and because hording chunks of knowledge helps them feel protected from change. Over time, much of the income stream that knowledge helped produce is siphoned off to perpetuate the data base. Then there is no easy way to separate the worthless clutter from the essential knowledge assets needed for daily operation and growth. Our solution is Knowledge Asset Management.
Knowledge assets can be divided into two types: tangible artifacts such as documents, models, patterns, or tools; and derivatives such as claims, or analytics related to those artifacts. Each attains value that can be gauged using Generally Accepted Accounting Principles.

What is Knowledge Asset Management?

It's the art of creating value by leveraging intangible assets. To be able to do that, you have to be able to visualize your organization as consisting of nothing but knowledge and knowledge flows.

(Karl Eric Sveiby)

How do knowledge assets benefit our clients?

Knowledge is like electricity. It can be generated and distributed but it is always more than the sum of its individual elements. And unlike the tangible elements of a manufactured product, knowledge is not depleted by use. It is enhanced both in scope and value.But not all knowledge assets are of equal value. Just like stocks, knowledge assets can rise and fall in value based upon changing conditions. Knowing how to build a better mousetrap is worthless if there are no mice to capture.

What is Knowledge Capital?

Knowledge Capital is a way of expressing intangible resources and outcomes that exist in the typical knowledge enterprise.

(Karl Eric Sveiby)

Is it possible to valuate Knowledge Capital?

Knowledge is an intangible resource until it attains value. This can only occur when tacit knowledge (what people know about your service or product) is expressed in an artifact such Web Content. Video, or Text Messages. Any knowledge artifact can be valuated using Generally Accepted Accounting Principles.

What are the varieties of Knowledge Capital?

Knowledge Capital has three varieties:

Innovation that is mainly internal and leading to the creation of "structural capital," which is a knowledge-related asset controlled by the organization that creates the structure; it is a matter of organizational learning.

Research and Development (R&D) that has both internal and external components leading to publicly available knowledge as well as knowledge owned by organizations and the people who belong to them.

Competence (self-maintained assets) may be internal or external leading to the creation of "human capital." It is controlled by the individuals who acquire it but may be transferred ex nihilo to others for reuse.

How does electro-zeta calculate the value of these varities?

Innovation can be valuated at both the concept stage and at the design and build stage. The concept stage requires comparison with similar concepts that have already been rendered. The design and build stage is based on market value.

Research and Development can be valuated based on sunk cost and current market value of artifacts produced during the R&D phase.

Competence is a catalyst for knowledge capital. As such it factors into the value but cannot be valuated separately.

What’s the difference between Domain Knowledge and Knowledge Capital?

Domain Knowledge is generally tacit. It exists primarily in the heads of domain experts who may or may not be willing to share it with others.

Knowledge Capital is never tacit. It may exist within an artifact such as a document, a recorded speech, or within an art form such as a scale model. It may be implicit or explicit.

Can Domain Knowledge be valuated accurately by KAM analysts?

Some practitioners of Knowledge Management believe that Domain Knowledge can be measured using Skill Tests and similiar means. We believe that the relationship between test results and knowledge capital is tenuous. People who are very competent at taking tests do not always transfer that competence to the creation of artifacts required to contribute value to the company. Instead, we focus on the tangible results of applied or actionable knowledge and calculate the potential value of that knowledge for upcoming projects.

What is the relationship between Knowledge Capital and Reuse?

Reuse provides single-source, on-demand access to coordinated, reliable, aggregated knowledge, implemented via effectively housed and managed engineering assets – products, information & knowledge – in a centrally coordinated fashion.

Knowledge Capital
defines the value chain for all intangible engineering assets. The principles of Knowledge Capital Valuation enable organization accountants to place a value on any knowledge artifact created by any person in the organization—regardless of where/how these artifacts are stored.

Is Reuse part of the KAM business model?


No. Our position is that reuse is a veiled attempt to manage the flow of knowledge as a manufacturing process. Most practitioners of Reuse have found that the cost of maintaining the viability of reusable products [form, fit, function] outweighs the value.


A knowledge artifact does not have to be maintained as an end in itself. It is either useful for the project at hand or it is not. If it is useful, its value can be assessed based on its immediate application to the project. If it has insufficient value it can be discarded or shelved for future use.


Is KcV compliant with generally accepted accounting principles (GAAP)?

Any knowledge that is shared with others, via knowledge artifacts, becomes tangible and subject to valuation using GAAP compliant methods However, tacit knowledge or an individual’s knowledge that has not been shared with others is intangible and its value cannot be established using KcV.. The only exception to this is the portion of a company’s value that is reported as goodwill when it is sold to another company at a price that greatly exceeds the value of that company’s physical assets.

How does KAM help clients find and track knowledge artifacts?

We look for hidden value in the people, places, things, and events that comprise our client's business entity.

It is not unusual for us to find hidden value in people such as the part-time receptionist who not only greets visitors and helps them find the person they need to visit, but in a brief 2 minutes manages to gather a complete profile of the visitor. This valuable knowledge is often wasted because the company has no CRM tool or has not conveyed to the receptionist that such knowledge has value and needs to be documented. KcV can only be used to assess knowledge artifacts. It is useless for evaluating tacit knowledge--no matter how detailed that knowledge is.

What are some examples of knowledge assets reported as goodwill?

Domain Knowledge, Equity in Branding, Innovation Reports, Intellectual Property Rights, and Business Models are all examples of knowledge assets found in company-owned artifacts.

How is goodwill different from knowledge capital?

Goodwill is an abstraction used by accountants to calculate the probable value of an intangible asset. Banks use this method when they estimate the equity value of a house based on the prior sale of three homes most recently sold in the same neighborhood.

Knowledge Capital valuation requires more concrete evidence in order to calculate the value of the house. A bid or purchase order from a bone fide buyer for the house would be a primary artifact for the calculation, but a sign-in sheet showing that 10 or more potential buyers were shown the house within 30 days of it being listed for sale at a specific dollar amount is desirable.

Both Goodwill and Knowledge Capital valuations are calculated using estimates. However, Knowledge Capital valuations are based on concrete foundations.

What kinds of knowledge artifacts are suitable for valuation?

Knowledge artifacts can be grouped into seven knowledge containers or object classes:

Process Knowledge– embedded knowledge in business processes that provides access to expertise at critical points

Product & Service Knowledge -- embedded knowledge in products used to deliver knowledge-intensive training and services

Customer Focus Knowledge – deep knowledge developed through customer relationships

Leadership Knowledge – human competencies nurtured in an innovative culture where learning is valued and knowledge is readily shared

Organizational Memory – implicit knowledge repositories with pointers for current and future use

External Relationship Knowledge– knowledge that flows across boundaries with sub-contractors, customers, employees, and communities of practice

Defined Knowledge Assets – intellectual property that can be registered, patented, or copyrighted

How can my Business obtain a Quick Look valuation of our Knowledge Base?

At your invitation, a trained and certified Knowledge Asset Analyst will meet with you and your staff--either in person or via video conference. The average session for a small business requires about 3 hours. At this session you will brief our analyst on the nature of your business, provide profiles of key personnel, and an overview of your current business objectives.

Within one week of this session, our Knowledge Asset Analyst will provide a comprehensive report listing all of the potential knowledge assets present in your business. Some may already be known and utilized. However, many will surprise you. In fact, you may find yourself saying, "Why didn't I think of that!"

Up to this point you will not have spent a dime on us. Our objective is only to help you understand what we do and how it can increase the real and potential value of your business. If you decide to retain us as your Knowledge Asset Management team, you will pay us a modest Retainer Fee, sign a Non-Disclosure Agreement, and put us to work. We do not bill by the hour. Each KcV project we agree to take on for you will have a fixed price agreed up front and specific success criteria attached to that price.

In other words: most of the risk is on our shoulders--not yours. How can we do this? Simple. We are very aware of our own Knowledge Assets. We are confident that once you have seen what we do and how it improves the value of your company, you will have no problem with our retainer fee or pricing policy. But this only happens if you invite us to work with you...

Contact us for details.