Measurement

The Know-Net IC Model

The Know-Net IC model aims to improve on current approaches

The Know-Net IC model has been developed through leveraging our knowledge and understanding of the Knowledge Management systems by:

• taking into account the research findings relating to successful implementations of IC measurement systems
• integrating the best of the current approaches and
• reviewing and minimising the shortcomings identified within each of the current approaches.

This translates into a model (see Figure) which:

• Provides a framework for systematic measurement of business performance measurements and knowledge assets/intellectual capital/Intangible assets.
• Follows the emerging standard of distinction among the IC categories into human, structural/internal and market/external.
• Incorporates the stocks from and the flows between Market Assets, Human Assets, Structural Assets and Financial Assets. The enables us to focus people's thinking about both knowledge as a strategic asset and the process for transforming (and managing) that asset which supports the basic premise on which the Know-Net Project is based.
• Is developed through a Top down, Bottom up process.
• When implemented, will be company specific (i.e. not be the same as another organisation's or as one of the examples).
• Must consider the links between each of the categories and financial capital, i.e. how much the company is spending in each category as well as how much value is generated by each of the categories.

In describing this model we have created examples of asset stocks and asset flows which are a composite of intellectual indicators from other approaches. We reviewed these for robustness, precision and relevance and also developed others in relation to asset flows and key knowledge management concepts (eg. competence, best practice, learnings, best knowledge, Intellectual property etc).

Summary of IC 'Stock' Indicators

The following table shows examples of the 'stock'

Flows of Intellectual Capital

The flow, that is the how knowledge is tranfered between human, structural and market assets and theiur resulting impact on the bottom line is extremely important

The following table gives some examples of the indicators that capture the essence of a flow through which an asset is transformed from one category to another. For example, let us assume we believe it is critical to the success of a strategy that some particular knowledge held by one person should be transformed into a structural asset (ie. Something that does not leave the office when the person does). Initially, just capturing, codifying and making available that knowledge to the key people it affects could be your measurement of success. What you need to consider measuring is not only the 'stock' of the human asset or the 'stock' of the structural asset involved but on the 'flow', focusing on how efficiently you have transferred this specific knowledge.

Implementing the Know-Net IC Performance and Asset Measurement System

The process for developing the measurements is shown in the figure. We start Top Down: identifying the organisation's vision, strategy, critical success factors (CSFs), the business performance measurements for those critical success factors and the key knowledge assets that should be associated with the CSFs. The CSFs and their business performance measurements can then be cross referenced to the Know-Net IC model framework (ie. Asset categories of Human, Structural, Market and Financial).

We then switch to a bottom up process: starting with the knowledge assets identified for each of the key CSFs and developing the knowledge asset measurements for them. These are then cross referenced to the Know-Net IC model framework.