Replying to LO24178 --
Here is how Paul Strassman says we should measure and account for
"Knowledge Capital" (his registered trademark!) He has a book that spins
all this out.
http://www.strassmann.com/pubs/valuekc/
Personally, I always smile at how things are valued in accounting. It is
all very slippery, but I can see that it has to be done. And since it
must be done, I have always supported extensions of accounting into
non-traditional areas where I think much value (also slippery) resides.
That's why I like balanced scorecard.
On the other hand, since accounting implicitly tries make everything look
like a physical commodity on the shelf in the warehouse, I'm wondering
whether the effort to extend accounting to cover knowledge is actually
doing more harm than good. As soon as you call knowledge "capital", you
then go crazy with the analogy, or even forget that it is an analogy.
In a different article Strassman says, "..knowledge assets are fungible;
they are easy to steal." Offhand, I would say that he is using that term
incorrectly. "Fungible" means, in the dictionary, exchangeable or
substitutable. In economics/accounting, I think it has more of the
meaning of 'has a market for', or 'is convertible to cash'. A lot of
knowledge, the bulk of knowledge in a company, isn't very fungible in that
sense. Some of it can indeed be stolen, but only by somebody who knows
what he is stealing, and has an ability to put it to use. But my main
point is that, here I am, rattling on about knowledge in an alien
framework. Are we really understanding knowledge by doing this? Is this
going to improve the use of knowledge in business?
Kent Myers
--"Myers, Kent C." <KENT.C.MYERS@saic.com>
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