Blog #10: discuss how it’s important for both managers and investors to evaluate a business from knowledge management point of view.

http://horning.blogspot.com/2007/04/knowledge-accounting-inventory-capital.html

Jim Horning talks about something that he read a long time ago about the conditions that enabled the emergence of industrial society. “THE CLAIM WAS that a key enabling factor in the “invention” of the industrial firm was the development of modern (double-entry) bookkeeping, particularly the understanding of the key concepts of inventory, capital, and depreciation.” He’s basically saying that prior to double-entry bookkeeping there way no way to connect a loss to a profit. The books will always look worse in periods of net investment, and better during periods of “living off capital.”

He say “A KEY FACTOR in the development of an information society may well be the adoption of accounting methods that treat knowledge as an asset with a “book value,” just like industrial goods or real estate.” Technology firms are precursors of this society because they have already reached a point where a significant portion of their assets are not represented by balance sheets. The entire expenditure is accounted as an expense, and the result does not appear on the balance sheet at all. Since there is no measure of a firm’s real assets, evaluation and planning are ad-hoc. With current accounting methods, investment in knowledge acquisition will always appear less profitable than draining down existing knowledge capital. This emphasizes short-term results over investment, such as product development or research. No firm can totally ignore investment in knowledge. Since “profit and loss” is so misleading in the short term, firms use arbitrary budgetary guidelines instead.

The basic problem is not the lack of a tangible “knowledge base,” (consider patents, trade secrets, designs, formulae, software, accounting records), but rather the failure to treat this knowledge base as a valuable asset.

Blog #9: Describe the definition of the five types of non-financial capitals. Discuss how something you are currently doing or should be doing can increase your value as a knowledge worker.

The five types of non-financial capital include: cultural, intellectual, emotional, human, and social.

Cultural capital refers to social assets that promote the movement of an individual or a groups social standing by means that are not economic. Some examples of cultural capital are education, appearance, and intellect. There are three types of cultural capital: embodied, objectified, and institutionalized. Embodied capital consists of an individual’s qualities that are either inherited such as family traditions and socialization or intentionally acquired. Objectified capital consists of a person’s cultural assets such as art. Institutionalized cultural capital is most often academic accomplishments.

Intellectual capital is the knowledge of an individual or group in a society or a business. Intellectual capital is classified into three groups: human capital, structural, and relational.

Human capital is the value that a business’s employees provide through their skills and expertise. Structural capital is what a business uses to enable human capital to work such as processes; but it can also include more obvious assets such as buildings, software, databases, and even the image of the organization itself. Relational capital refers to the relationships that a corporation has with suppliers, consumers, franchises and trademarks.

Emotional capital is the brand value of a product that causes individuals to continue purchasing a product. There are three factors in emotional capital: external, internal and interpersonal.

Social capital is the expected benefits gained from interaction and collaboration between individuals and groups. Each type of non-financial capital is important to businesses when choosing their employees but it is also important for individuals to improve themselves.

All five capitals interrelate to one another, balancing one another. I am doing some things personally that affect my knowledge working career. My cultural capital would be my higher education of studying INFS and continuing to pursue my military career. This particular capital one would be categorized as ‘institutionalized cultural capital’. A great example of my intellectual capital is the unit I’m assigned to during my drill and my full-time unit status at my full time job.

Blog #8: discuss how knowledge workers ought to improve themselves in the areas other than analytic thinking and critical thinking capabilities.

http://www.oprah.com/spirit/Excerpt-from-A-Whole-New-Mind-by-Daniel-Pink

The information era includes individuals who are analytic and critical thinkers. Although these are great focus areas, workers ought to improve themselves in other ways. Daniel Pink’s book ‘A Whole New Mind’ focuses on just that. It’s based on the concept that the world is currently shifting away from the information era into an era of conceptual thinking. The information era included knowledge workers; whereas the conceptual era is best for creative and empathetic people .To understand how conceptual thinking can improve individuals we must first understand its concepts as well as the concepts of critical and analytical thinking. In Daniel Pink’s book he introduces six senses that can help individuals succeed in conceptual thinking. These six senses are: design, symphony, empathy, story, play, and meaning. Design is used to move beyond mere functionality to engage senses; story is used by businesses to give their products and services a story rather than just an argument on why the consumer should choose it. Symphony refers to adding invention and focusing on the big picture; empathy is used to go past logical thinking and utilize an individual’s emotions. Play is used to bring humor to a business and its products; and lastly, meaning is used to define the purpose of an individual’s journey.

These six senses increasingly will guide our lives and shape our world. The high-concept, high-touch abilities that now matter most are fundamentally human attributes. After all, back on the savannah, our cave-person ancestors weren’t taking SATs or plugging numbers into spreadsheets. But they were telling stories, demonstrating empathy, and designing innovations. These abilities have always comprised part of what it means to be human. But after a few generations in the Information Age, these muscles have atrophied. The challenge is to work them back into shape.

Blog #7: Search the WWW to find an expert system and a neural network in the real world. Describe the problem domain, main system features, and the result of the the system implementation.

Expert systems are interactive web-based automated knowledge systems (machine response generated by keywords). The three basic technological components of an expert systems are knowledge validation, knowledge sharing and knowledge preservation. The components work together in a way of enhancing the knowledge capability in the company and the functionality of that product or services offered. The specific challenges we face with expert systems are being able to pin-point specific questions and over generalization of questions and/or areas of concern.

Artificial neural networks have the structure much like the human brain. These networks have to be trained with different scenarios to ‘learn’ the processes and decision making skills. An example of a neural network would be a loan processing application. The system has already ‘learned’ the different types of inputs the users must apply in order to get a ‘passing’ loan approval. Expert systems do not ‘learn’ from the input, whereas neural networks learn from the data input and the desired output from overtime.

Blog #6: Does Facebook make one happy or sad?

http://socialnewsdaily.com/11344/facebook-makes-you-happy-study/

You would think that social media sites, such as Facebook, would create a sense of envy among friends and followers. In a sense, I believe this to be true. People want to post what they are doing, where they are at, who they are exploring with, and their journeys of every day life with those who care to be involved. Of course if I see Johnny traveling to Hawaii, I’m going to be envious. I want to go Hawaii and I want to sit on the beach and drink that delicious mango sunset on the beach. However, a new study on whether Facebook makes you happy out of Cornell University doesn’t contain the normal skeptical slant, suggesting that the social network may indeed help users feel connected and cared about in ways “meatspace” does not.

“Mr. Hancock was surprised to learn that the students felt more loved and worthy after visiting their Facebook profiles than after doing traditional self-affirmation exercises, such as making a list of what is meaningful to them … There is something in our Facebook profiles that makes us feel better about ourselves, the researchers concluded. Whether it is the self-selection of the community (after all, we don’t “enemy” people) or the best-foot-forward way we present ourselves, Facebook appears to have a healing effect on our bruised egos.”

 

People want to share things that make them happy, laugh or anything in between with those that interact with on a daily basis. We share so that others can enjoy the experience with us, as an outside party. Social media can also be used a tool to join all of us together and share events with each other, enjoying the real world together. It’s a way to stay connected with those that you may not be able to interact with on a daily basis. For example, relatives who live in a different state or your best friend who moved away.

I personally believe that social media makes me a happier person. I want to be involved with my ‘friends’ and families lives even if I can’t be there to enjoy the activity. I believe some of the things I do in my life is interested enough for others to enjoy. I like sharing events and gathering my friends to enjoy events together.

 

“Everyone from ancient philosophers to contemporary researchers agrees that the KEY to happiness is strong ties to other people. We need need close, long-term relationships, we need to be able to confide in others, we need to belong, we need to give and receive support. Studies show that if you have five or more friends with whom to discuss an important matter you’re far more likely to describe yourself as “very happy.” If a mid-life crisis hits, one of the most common complaints is the lack of true friends.”

 

Assignment #5 – Text Mining Web 2.0

Reference / Link: http://tech.fortune.cnn.com/tag/ck-12/

Web 2.0 has been around since 1999. A Web 2.0 site may allow users to interact and collaborate with each other in a social media dialogue as creators of user-generated content in a virtual community, in contrast to websites where people are limited to the passive viewing of content. Examples of Web 2.0 include social networking sites, blogs, wikis, video sharing sites, hosted services, web applications, mashups and folksonomies.

Open source textbooks is something new that is being introduced to education and the community. Why would you want to fork out $100 for a textbook when you can easily get it for $5? I don’t know anyone who would rather opt for the $100 hardback textbook that would be obsolete within the next two years. A cadre of so-called open-education publishers is slowly beginning to gain the trust of schools and university systems by posing that question. Using free, open-source education materials, firms like CK-12 and Boundless are building digital textbooks and learning materials (mostly for math and science) that students and teachers can use and edit as they wish.
Due to budget restraints and dramatic increases (812%!!) in textbook costs, university have been forced to give open-source a shot.

“In recent years, the open-source and free education movements — two different, but related, ideas — have picked up steam. Free educational resources — like a university course on Coursera, for example — may be available for students to use at no cost, but students cannot reuse, remix, or repurpose that course content however they’d like. By contrast open-source materials like CK-12’s materials are not only free, but can also be freely repurposed in any way a student or teacher sees fit. Massive open online courses (MOOC) providers like Coursera, EdX, and Udacity have been recruiting more and more universities to offer courses online to anyone for free, though many schools still insist on owning their course content. Khan Academy, which is partly open-source (its back-end platform is proprietary, but most of its content is open), has attracted millions of students. The Harvard and MIT-backed MOOC EdX recently announced that it would begin to open up parts of its back-end course platform to give organizations all over the world an opportunity to make online classes of their own.”

 

Assignment #4 – The World is Flat 3.0

Reference / Link: http://video.mit.edu/watch/the-world-is-flat-30-9321/
Thomas Friedman’s speaks at MIT on the topic of the world being “flat” and its implications

Thomas Friedman thinks the world is becoming ‘flat’. According to Friedman, there are two worlds–“a flat world made up of professionals and the ruling class where everything is clean and bright and shining and zinging without friction through fiber optic cables, and an “unflat” world where working-class people and the poor live in circumstances ranging from quiet desperation to downright dirty.”

What stuck with me is that in order to stay ahead of others, you need to be innovative. Putting forth more effort into the things you do instead of just ‘getting by’ is key. Technology has grown rapidly over the past 20 years and its no longer a unique skill. There are kindergarteners out there that know more about technology than grown adults. We need to continue to expand our knowledge by learning new things and refreshing the knowldege we have already learned.

Assignment #3 – Knowledge Spiral

Reference: http://www.knowledge-nurture.com/downloads/NONAKA.pdf

This course “knowledge management” focuses on the best way to share your knowledge and the best ways to convert explicit knowledge so that it’s easily understood / learned by others.  The knowledge spiral concept is one that is discussed as a combination of tacit and explicit knowledge and how they relate to one another.

Tacit knowledge is subjective and experience based knowledge that cannot be expressed in words, sentences, numbers or formulas, often because it is context specific. This also includes cognitive skills such as beliefs, images, intuition and mental models as well as technical skills such as craft and know how. Explicit knowledge is objective and rational knowledge that can be expressed in words, sentences, numbers or formulas (context free). It includes theoretical approaches, problem solving, manuals and databases.

Nonaka models knowledge transfer as a spiral process. Start with a 2×2 matrix, in which existing knowledge can be in either form – tacit or explicit – and the objective of knowledge transfer can be to convey either tacit or explicit knowledge. Each mode of transfer operates differently:

1. Tacit-to-tacit (socialization) – individuals acquire knowledge from others through dialogue and observation
2. Tacit-to-explicit (externalization) – the articulation of knowledge into tangible form through elicitation and documentation
3. Explicit-to-explicit (combination) – combining different forms of explicit knowledge, such as that in documents or databases
4. Explicit-to-tacit (internalization) – such as learning by doing, where individuals internalize knowledge into their own mental models from documents.

   Organizational knowledge starts at the individual level with thoughts or understanding (internalization). It them moves upwards through socialization, where individuals dialogue with their team colleagues. The ideas are then articulated (externalization) and become more widespread through diffusion of explicit knowledge (combination). As knowledge moves up the spiral knowledge is more widely spread and the spiral gets wider.

   What also happens is that as individuals access organizational knowledge, they apply it and internalize new knowledge, thus setting the stage for an enhanced piece of knowledge to work its up the spiral.

   The concept in practice:
   

   Thus the tacit knowledge of an organization in embodied in its people and the team and communities within which they operate, while the explicit knowledge is in various information repositories (databases, intranet pages etc.) A KM programme should therefore consider a range of strategies and practical techniques for each of the core conversion processes, which we have grouped under the broad headings shown – knowledge transfer mechanisms, knowledge harvesting, information management and the learning organization.

   Reference

   1. The Knowledge-Creating Company: How Japanese Comapnies Create the Dynamics of Innovation, Ikujior Nonaka and Hirotaka Takeuchi, Oxford University Press (1995).

 

Assignment #2 – Does IT Matter?

Information Technology is unarguably the #1 supporting backbone of today’s commerce. As information technology has expanded and increased it’s power over the economy, companies now view it as a critical resource to their success. One is to note that information technology is still relatively new. Just 20 years ago, IT positions were looked down upon as low-skilled jobs, such as the secretary. Fast forward to now, 2013, most companies now have assigned chief information officers to their senior management teams, and many have also hired strategic consulting firms to provide fresh ideas  on how to leverage their IT investment for differentiation and advantage.
Differentiation and advantage is scarce now-a-days because you only gain an edge over rivals by having or doing something that they can not have or do. The problem lies in availability and afforability in today’s technology. The core functions of IT – data storage, data processing, and data transport has become necessary functions of companies. They are becoming costs of doing business that must be paid by all but provide distinction to none. As their availability increased and their cost decreased  they became commodity inputs.

Infrastructural technologies offer far more value when shared than when in isolation. The characteristics and economics of infrastructure technologies make it inevitable that they will be broadly shared- they  they will become part of the general business infrastructure.

The trap that executives often fall into is assuming that opportunities for advantage will be available for indefinitely. By the of the building out phase, the opportunities for individual advantage are largely gone. The only meaningful advantage most companies can hope to gain from an infrastructural technology after its build out is a cost advantage – and even that tends to be very hard to sustain. The technology’s potential for differentiating one company from the pack – its strategic potential – inexorably declines as it becomes accessible and affordable to all.

The history of IT in business has been a history of increased inter-connectivity and interoperability, from mainframe time-sharing to minicomputer-based local area network to broader Ethernet networks and on to the Internet. Most business activities and processes have come to be embedded in software, they become replicable, too. Most of the major vendors, such as Microsoft, are trying to position themselves as IT utilities, companies that will control the provision of a diverse range of business applications over what is now called ‘the grid’. In the dozens years from 1989 to 2001, the number of host computers connected to the internet grew from 80,000 to over 124 million. (Harvard Review)

There are many signs that the IT buildout is much closer to its end than its beginning. First, IT’s power is outstripping most of the business needs it fulfills. Second, the price of essential IT functionality has  dropped to the point where it is more or less affordable to all. Third, the capacity of the universal distribution network (the Internet) has caught up with demand – indeed, we already have considerably more fiber-optic capacity than we need. Fourth, IT vendors are rushing to position themselves as commodity suppliers or even as utilities. Finally, and most definitively, the investment bubble has burst, which historically has been a clear indication that an infrastructural technology is reaching the end of its buildout.(Harvard Review)

IT may be reaching it’s build-out, but it’s not going anywhere. We may have great IT for the business world but we still need IT professionals to manage these functions and users trained to use the system. The key to success is no longer to seek advantage aggressively but to manage costs and risks meticulously.

 

Assignment #1 – Increasing Returns

The Law of Success: Increasing Returns

“Render more service than that for which you are paid and you will soon be paid for more than you render. The law of ‘Increasing Returns” takes care of this.” -Unknown

To full understand the law of Increasing Returns, one must be aware of Diminishing Returns. Diminishing Returns focus primarily on commodity business such as agriculture, tea, and coal for the economic market of supply and demand. For example, let’s say you harvest tea. As the demand for tea grows, you are then forced to expand your land to a not as high as your first; therefore the yield per acre for the yield per dollar of input will be less – diminishing returns. In these traditional industries, diminishing returns set in, so getting 100% bigger may only generate 90% more value. Knowing this, you may ask “If you double a company’s size, does it become more or less than twice as valuable?”  It’s not bigger is better, but how much better is to be big?

With these types of businesses, knowledge is at the top of the business rather than the majority with the workers. The knowledge is concentrated at the top and that is why a command and control, pyramidal, management structure worked well. Economies of scale were precisely a mechanism use by those industries to try to offset the diminishing returns. In contrary, increasing returns is the economic law that governs modern knowledge based businesses such as software. A knowledge-based company does not always have to be a creator of technology.  It can be a skillful user, because a knowledge-based company is one which applies knowledge to gain a competitive advantage.

Increasing returns focuses on the knowledge of the users rather than a concentrated pyramid management structure of the typical commodity business. The user has to invest a quite a bit of time and effort into learning to use the product (i.e., software) and does not want to change just for the mere sake of changing. Let’s use an example of a new bicycle when you were a child. You first learn to use a bicycle that’s brakes system is the ‘pedal backward’ method. You get a new bike for your birthday with the handbrakes. Having the ‘pedal backward’ method the only way you know how to break, you forget about the handlebar brakes. You’re in a situation adrenaline rushing you and crash your bike because your reflexes for the new bike are not set in. In modern lingo, don’t mess with the user interface.

Software manufacturing work this way: the more you sell, the more you sell. In comparison to the tea farm, you may sell less because you have lesser valued resources. Customers find extra value from buying software from a bigger vendor- because other people use the software. It is easier to exchange files in its data format, it is easier to hire staff that is trained in the use of the software, and it’s even easier to find books to explain how to use the software. In other words, the more other people buy a software product, the more likely you are to buy it yourself. Those who tend to ‘join the norm’ to dominant high-technology platforms become destined to the software and all its upgrades.

For the reason that the highest quality of software is demanded, higher qualified programmers are required. Since developing software costs are so high, the more sales you have the better you are to offset costs. In comparison to commodity businesses, knowledge-based businesses tend to have pricing power in the face of competition. Render more service than that for which you are paid and you will soon be paid for more than you render. The law of ‘Increasing Returns” takes care of this.”