Before going further with the discussion about the value of knowledge, it is helpful to identify the knowledge you might already have in your business. When you open the office in the morning and make the coffee, you may brew a particular brand or flavor that you know is favored by many people in your community. While the coffee pot is going, you turn on your computer or pick up the morning paper. The knowledge you have in your office exists in many forms such as books, papers, mathematical formulas, procedure manuals, state and federal regulations or guidelines, computer code, decision trees, and so on. We often do not inventory these assets. This knowledge is codified, in the form of accumulated facts, methods, principles, or techniques specific to your line of business. The general term for this type of knowledge is called explicit knowledge and its primary attribute is it can be shared.

Each and every one of us is unique, a knowledge repository often called a subject matter expert or that which is in your mind, a domain expert and hence only usable by you the expert in your line of business. This second classification of knowledge in called implicit knowledge. At this stage you may be thinking it is easy to calculate the value of your expertise. Adding up your college education, real estate training courses, seminars and conferences over the years. Everyone has done this at one time or another. I might pose to you that the real difficult component of valuing your knowledge is the constant efforts you make on a day to day basis in doing your job better and better beyond your college days, learning from mistakes and keeping certain things you discovered that work well a secret. Your expertise does not shine until perhaps you have served a customer well or achieved a milestone.

Huge egos aside for a moment, why are 2 managers better than 1? Or, a whole office full of managers at different levels better than any single professional? What I am getting at here is that as a business entity you cannot think in terms of knowledge capital until you consider the organization and enterprise as a whole. This is the accumulation of company specific knowledge as aggregated in people. An even more difficult notion to valuate. However, you may have noticed when this really works. For example, when you have participated in a really successful meeting where the agenda was accomplished and all the team members brought their think power to solve problems or plan strategy. Each persons years of accumulated knowledge, the investment your company has made in training its employees is worth more than what the company pays in salaries. Successful meetings internally or with customers and executing on plans is where the enterprise can realize incremental profits on the firms knowledge capital. The enterprise must manage knowledge capital as their most significant asset.

To know something is to “know about it” leveraging a certain capacity for action which corresponds to “know how”.

In Part III, the post will have a few follow up thoughts and then discuss ways to use this asset.