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Long Range Planning

34/4 August 2001

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Georg von Krogh, Ikujiro Nonaka and Manfred Aben Making The Most of Your Company´s Knowledge georg.vonkrogh@unisg.ch

    Companies spend a lot of effort analysing the strengths and weaknesses of their tangible resources and responding to the analysis by adjusting activities such as investments. Yet little guidance exists on how to map a strategy to attain the best out of another source of competitive advantage: knowledge. For example, a company must assess how it creates and shares its knowledge so that it can innovate, learn from past failures as well as successes, and identify knowledge gaps. In this paper the authors draw from the knowledge management practices at Unilever, the international consumer goods company, to offer a framework of four strategies for managing knowledge. They describe how Unilever identified and defined its "knowledge domains" within which the knowledge exercises were to be operated. Knowledge domains are the starting points and can shift and evolve as the processes of knowledge creation and transfer progress. The four knowledge strategies that the authors advocate are: leveraging, expanding, appropriating and probing. Leveraging focuses on transferring existing knowledge throughout the organisation and can entail the use of workshops to share experiences of good practice. Expansion strategy seeks to increase the scope and depth of existing knowledge by bringing in additional expertise. The appropriation strategy looks to transfer knowledge from external sources, such as alliances or academic groups. Finally, the probing strategy gives teams within the organisation the responsibility to build a new knowledge domain from scratch, which can provide radically new insights into a company's direction. The authors conclude by saying that their approach can help managers in both their goal setting and resource allocation.

Heinz Ahn Applying the Balanced Scorecard Concept: An Experience Report ahn@lut.rwth-aachen.de

    The Balanced Scorecard is often recommended as a comprehensive management tool linking strategic and short-term action planning. While the literature offering general statements about the successful introduction of the Balanced Scorecard is plentiful, few reports of detailed experience are available. This article offers an insight into the process of elaborating the Balanced Scorecard for a strategic business unit of ABB Industrie AG, outlining the experiences the unit gained during its introduction of the Balanced Scorecard, as well as emphasising important issues concerning the limitations of this approach.

Tony Tollington UK Brand Asset Recognition Beyond "Transactions or Events" a.tollington@mdx.ac.uk

    This paper addresses the accounting recognition of intangible assets and, in particular, brands assets, to show that the definitional requirement for "transactions or events" appears to restrict their widespread recognition, capitalisation and disclosure on UK balance sheets. The assertion as to the restrictive nature of the above feature of the UK accounting definition of an asset is examined in three ways. Firstly, that there are many intangible assets that exist but which fall outside the scope of the asset definition because they do not have an identifiable transactions-based existence, date or value at all. Secondly, that transaction-based measurement initially dominates in the accounting recognition and disclosure of intangible assets. Despite the a-priori logic of recognition before measurement, the perceived lack of reliability of measurement, other than where transaction-based, is used as the principal reason for the non-recognition of intangible assets in financial statements. Thirdly, the absence from the existing asset definition of recognition criteria based upon the legally separable nature of assets. This issue is particularly acute with regard to the recognition and disclosure of brand assets where the typical accounting response is to subsume their identity within goodwill (where purchased) or to ignore them completely where they are internally created by a business over time (where not purchased). The paper proposes intangible asset recognition, capitalisation and disclosure having a-priori ‘granted' these assets independent status as determined by a legally separable identity. That is, recognition before measurement according to a legally separable nature rather than measurement determining the accounting recognition of intangible assets.

Bernd Wirtz Reconfiguring Value Chains in Converging Media- and Communications Markets wirtz@uni-wh.de

    The media and communications industries are undergoing a fundamental transformation. The unstoppable advance of the internet has been paralleled by a convergence both within and between the media and communications sectors. Recent examples include AOL's takeover of Time Warner and AT&T's march away from its core telecoms business with a succession of internet-related acquisitions. Such transformations impact corporate strategy as value chains and value-added stages are being redefined. For example, value chains that were specific to one industry are being rebundled to fit the new convergence. This paper examines the response of the media and communications industries to the changing landscape. It outlines the old order of value chains and describes how this is being adapted to the new order. For example, media and communication companies are striving to integrate their value-added stages so as to offer the customer a "one-stop" shop for a variety of services. This has profound implications for customer relations as it "locks" the customer in to a range of links with that company. It also allows companies to offer "price bundling" whereby customers are happy to pay for a package of services. Because of this growing integration, the author says that specialised firms that focus on only one link in the value chain will find it increasingly difficult to remain competitive. The paper concludes by noting that although such convergence is at present unique to the media and communications industries, the research that it offers provides a starting point to the examination of this phenomenon.

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