Knowledge Assets Professional's Guide to Valuation and Financial Management

This book is a practical guide to an investment-oriented approach to the valuation of knowledge management (KM) strategies and projects. It is not a how-to book on the accounting, appraisal-oriented, or intellectual capital approaches to the valuation of intangible assets. Instead, it focuses on how best to leverage knowledge assets to create real economic value. Most managers are interested in results. This book shows how to demonstrate those results by driving knowledge assets more directly and visibly into the financial statements of the organization.

The purpose of the book is to provide a rigorous financial framework for analyzing the value that can be created and protected by investing in the knowledge assets of an organization. The valuation methodology presented in this book provides the tools you need to get the most from your firm's investment in knowledge management. Specifically, we will combine selected tools from value-based management and financial economics with proven and unique models from knowledge management to create a method for valuing knowledge strategies, KM programs, and specific KM projects.

The book is written in four parts. Part I focuses on essential background material in knowledge management, finance, economics, and organizational theory. Part II uses the background material to develop a formal treatment of knowledge management and the KM valuation methodology. In Part III, the KM methodology is applied to over a dozen real-world valuation challenges in knowledge products, intellectual property, and knowledge work. Even though we use our own firm as an extended case study, care is taken to show how the examples we give (e.g., knowledge products and services, corporate libraries, communities of practices, enterprise-wide knowledge sharing systems, and patents) can be generalized and applied to other types of businesses. Part IV focuses on active research challenges in knowledge management and KM valuation.

Mark Clare, M.A., M.S., is assistant vice president of strategic planning and knowledge management at Lincoln Re, where he designs, implements, and helps direct knowledge management activities. He also assists with the company's integrated planning process.

Mr. Clare joined Lincoln National in 1990 as manager of the corporate artificial intelligence (AI) group. He has held a variety of positions in knowledge management and information systems for Lincoln Life and Participated in its reengineering project. Before joining Lincoln, he held AI positions at Navistar International and 3M.

Mr. Clare holds a bachelor's degree in physics from Ball State University, where he also earned two master's degrees: one in philosophy with an emphasis on theories of knowledge and the other in physics with an emphasis on quantum mechanics. He also completed a study of cognitive science under a fellowship at the University of Minnesota. He is listed as one of three inventors on a software patent at 3M.

Arthur W. DeTore, M.D., M.B.A., is director of strategic planning and knowledge management and a vice president at Lincoln Re. Dr. DeTore has managed Lincoln Re's integrated strategic planning process and knowledge management activities since 1994. He joined Lincoln National in 1986 as a medical director in Lincoln's Medical Department. Subsequently, Dr. DeTore was one of the founders of Lincoln National Risk Management, Inc., Lincoln Re's subsidiary that develops and markets knowledge-based solutions. He has also served as the chief knowledge engineer of Lincoln National Risk served as the chief knowledge engineer of Lincoln National Risk Management, the manager of Lincoln Re's European operations, and the director of Special Alternatives, Lincoln Re's managed care services.

Dr. DeTore has a bachelor's degree from Harvard University and a doctor of medicine degree from Tufts University. He is board certified in internal medicine and has also received his M.B.A. through an executive M.B.A. program at the University of Tennessee. He holds a patent on the use of information technology in evaluating insurable risks and a patent for automated decision making. Dr. DeTore has published articles on knowledge, technology, and strategy.