Virtual-finance

Published at a time of waning euphoria about the dotcom boom, this hefty tome offers new perspectives on the importance of knowledge assets and intellectual capital for unleashing business model innovation.

The 25 chapters are drawn from 34 contributors in the U.S., Europe, Asia and Latin America; the compiled material is divided into four sections: KM frameworks, knowledge work, knowledge assets valuation, and organizational aspects of business model innovation. The writing styles are varied, and differing perspectives are offered at the cutting edge of the KM curve.

IT investments have not always been in lock-step with productivity increases, Malhotra rightly begins. For instance, ERP implementations led to an unprecedented level of information sharing across organisational functions - but straitjacketed the information flexibility of information processing for each of the locked-in functions.

And despite contributions of IT via phases like automation, streamlining of procedures, and process re-engineering, there has been little emphasis on business model innovation or rethinking the overall business, argues Malhotra.

Increasing empowerment of online customers, suppliers, partners and other intermediaries have led to a greater impact of external environments on internal logistics of a company, a trend well-exploited by Net pioneers like Amazon.com.

"It is not that traditional brick and mortar companies were not leading users of IT; however, the new Net-based companies have fundamentally redefined the value equations related to their internal value chains and supply chains," says Malhotra.

In such a hyperturbulent and discontinuous environment, he identifies shortcomings in much of the current KM thinking, whose simplistic assumptions may inadvertently make yesterday's archived best practices tomorrow's core rigidities.

"The new business model of the Information Age is marked by fundamental, not incremental, change," he argues. Current KM approaches haven't dealt adequately with the "creative abrasion and creative conflict" that are necessary for business model innovation today.

KM should embody the organisational processes that seek synergistic combination of data and information-processing capacity of information technologies on the one hand, and the creative and innovative capacity of human beings on the other, Malhotra advocates.

Management strategies need to shift from command and control - to sense and respond. KM processes should be focused on doing the right thing (effectiveness), not just doing the thing right (efficiency). KM is not merely about bottling water from rivers of data, but about giving people canoes and compasses to navigate in these rivers of data. Instead of just codified best practices and enterprise portals, the emphasis should be on unlearning ineffective best practices and the continuous refinement and pursuit of better practices.

Other KM framework writers in the book also agree with some of these positions. Dealing with complexity, equivocality, uncertainty, and ambiguity in today's environment can lead to information overload and collapse of sense-making in a company.

Tools like the knowledge matrix can be used for knowledge accounting and management in a company, especially for managing fuzzy boundaries between external entities where decisions about outsourcing and alliancing need to be made (particularly in the case of global operators).

KM practices can differ according to the nature of the organization: project-based (eg. construction industry), umbrella corporations (eg. GE), virtual business communities (eg. the Linux movement on the Internet), and the multi-directional network (eg. lobbies of SMEs in Taiwan).

In terms of new approaches to knowledge work, Malhotra advocates a movement away from hi-tech hidebound KM systems to one of more creative chaos, greater social interaction, playfulness in organisational choices, and strategic planning as anticipation of surprise.

Care should be taken to ensure that IT-driven KM strategy does not become mechanistic and objectify and calcify knowledge into static, inert information, thus disregarding the role of tacit knowledge.

A useful way of planning for increased information flows among mobile workers is via a two-dimensional grid for different/same time/place interactions, with tools like Intranet-based email, videoconferencing, and meetings. Challenges can arise in virtual organizations which allow tele-work, due to possibility of overwork, stress, and isolation among its knowledge workers.

New kinds of 'knowledge toolboxes' are called for to effectively measure human capital and organisational culture elements like trust, and to actually use these measures. Stakeholder knowledge values lie at different levels: employee (self-actualisation), customer (product adoption capability), and top management (cohesiveness, motivation).

A very interesting chapter offers an example of assessing knowledge capital at the national economic level, while planning for growth and performance for the entire country.

Going beyond measures of GDP, a joint Swedish-Israeli study assessed Israel's intellectual assets in 1997 in terms of financial capital (productivity, exports), market capital (diffusion of new products, participation in international events, openness to different cultures, language skills), process capital (computerization and communications infrastructure, Internet usage, newspaper circulation, student-teacher ratio, innovation, top management international experience, entrepreneurship, VC funds, immigration), human capital (equal employment opportunities, percentage of book distribution, health rates), and renewal and development capital (civilian R&D expenditures, scientific publications, patents, startups).

Another chapter extends such valuation considerations to public-private partnerships, involving academia, industry and government, which are becoming increasingly necessary as no organization or country can on its own generate all the knowledge it may need.

Priorities, timelines, domains and financial expectations for each sector vary, and these in turn influence the nature of knowledge assets generated by a country and their monetary attachments, eg. financing of new research for the industry or for citizens at large.

At the KM tool level, researchers and entrepreneurs are racing to create the next generation of effective KM applications and infrastructure, including communication, storage, gathering, dissemination, and synthesis. Ernst&Young predicts that KM has the potential to exceed ERP as an application opportunity.

CKOs play a key role in organizations, in managing corporate knowledge capital and championing knowledge-centric cultures; they require a blend of technical, human and financial skills.

In sum, this is a comprehensive collection of case studies and analysis at the cutting edge of KM practice. The diverse range of material makes for an interesting and informative for advanced KM professionals.

A poxy book - between the front and back covers is a lot of air in which the word "virtual" is said 3 times in every sentence. Take the word out and you have one of those ghastly management texts written from a belief system without any real practical backup. The tenets are unbelievably ignorant in some cases. Anyone who can say that executives who express preference for face-to-face communication are being defensive doesn't know a thing about socialisation or tacit knowledge processes. They must think the world can be ordered around aka the military model. oh whoops, one of the authors spent 35 years as a career officer in the USAF. So if you are into military-type operations where commands can be relayed over sophisticated networks, this book is for you. If you are interested in the boundaryless organisation and the meaning for social behaviour, steer clear.

Chapters 18-22 are worth more than the price of the book. The farther I read the more impressed I was. In the beginning I was wondering about its value but it has proved invaluable to me. It's a reference tool that I find myself going to repeatedly. I highly recommend it, even though it was written in 1995, I don't know its equal. Posted 10-2002.

A very realistic book about the organizational transformation in the '90s An Excellent set of atoms for having in your own home.