Knowledge Drives Corporate Value

Every company ponders its corporate valuation today. What are we worth? How can we increase our net worth. Who might we buy? How do we best spend our free working capital? How many buildings should we build and where? How do we raise our stock price and corporate valuation?

These may be a reasonable set of operational questions, but they lack direction and wisdom from a strategic standpoint. Corporate valuation today is not based upon capital assets, but upon brand identity, committed professionals and knowledge, insight and wisdom (what I call the knowledge pyramid). Lets speak about the knowledge pyramid for a minute.

Every corporation has data, kind of like every corporate office has dust or trash bins. Data are useful but only as a foundation for knowledge, insight and wisdom. Yet, many corporations never get beyond data. They manage data as if it were the most important corporate asset. They manage data as intellectual capital and answer every unique informational request through a labor intensive and single faceted exercise.

Stellar corporations recognize where and how value is created and progress up the value pyramid to knowledge, insight and wisdom. The progression is not easy since each step up demands deeper thought, contemplation and interaction between the target customers and the resident professionals -- an effort that will prove to be well worth it.

Data -- Raw, unprocessed facts or aggregations of facts

Information -- Data organized to tell a story or answer a question

Knowledge -- Information placed in a strategic business context

Insight -- Knowledge framed within significant industry/customer/product service experience

Wisdom -- Insight blended with a deep understanding of human nature

In today's world, your corporate valuation is based upon how quickly you progress up the knowledge pyramid and how long you can remain at the top levels.

So what does this mean to business strategy. Well it means that any complete business strategy must address the creation and maintenance of corporate intellectual capital (collected and documented knowledge, insight and wisdom). Intellectual capital that goes far beyond data. It means that one of the most important projects that any company will undertake is the migration from data to knowledge, insight and wisdom. Those data bases you are thinking of building are not just an information technology project, but a corporate-wide strategic project. Treat these informational projects in a form commensurate with their importance. Staff then with your best, brightest and most experienced business and operational professionals and not solely from the information technology department. They are not technology projects, but business value added projects.

The knowledge pyramid is the key to corporate valuation today -- it is also the key to survival within this ever changing and always challenging global business ecosystem. No one can survive by standing fixed in today's dynamic business market place. Management through continuous change is essential; management empowered through the knowledge pyramid.

When organized and documented the knowledge pyramid is called intellectual capital. Not only does intellectual capital empower today's thinking and decision making, but it forms the only reliable corporate memory in this world where the average professional employee will experience 7 to 8 different companies during her/his business career.