Intro to KM: Glossary of Knowledge Management (KM) Terms

Balanced Scorecard System (BCS): method of measuring performance of a firm beyond the typical financial measures. Links corporate goals and direct performance measures in a framework specific to a firm, and is one method of measuring the impact of knowledge management.

Best Practice: those practices that have produced outstanding results in another situation and that could be adapted for our situation.

Calculated Intangible Value: an “elegant way to put a dollar value on intangible assets” uses a measure of the company’s ability to outperform an average competitor that has similar tangible assets as the firm’s value of intangible assets. Uses the following steps: 1. Calculate average pretax earnings for three years; 2. Go to the balance sheet and get the average year-end tangible assets for three years; 3. Divide earnings by assets to get the return on assets. 4. For the same three years, find the industry’s average ROA; 5. Calculate the “excess return” by multiplying the firm’s assets by the industry ROA and subtracting them from the firm’s pretax earnings; 6) calculate the three year average income tax rate and multiply it by the excess return, this results in the premium attributable to intangible assets; 7) calculate the net present value of the premium by dividing the premium by the company’s cost of capital.

Case Based Reasoning: a branch of artificial intelligence that attempts to combine the power of narrative with the codification of knowledge on computers. Involves extraction of knowledge from a series of narratives, or cases, about the problem.

Collaborative Tools: tools such as groupware that enable both structured and free-flow sharing of knowledge and best practices. An example is Lotus Notes.

Communities of Practice: aka affinity groups;

A) informal networks and forums, where tips are exchanged and ideas generated.

B) a group of professionals, informally bound to one another through exposure to a common class of problems, common pursuit of solutions, and thereby themselves embodying a store of knowledge.

Core Capabilities:

A) constitute a competitive advantage for a firm; they have built up over time and cannot be easily imitated. They are distinct from both supplemental and enabling capabilities, neither of which is sufficiently superior to those of competitors to offer a sustainable advantage.

B) bestow a competitive advantage on a company . . . distinctive, firm-specific, or organizational competencies; resource deployments; or invisible assets.

Core Rigidities: refers to the idea that a firm’s strengths are also – simultaneously – its weaknesses. The dimensions that distinguish a company competitively have grown up over time as an accumulation of activities and decisions that focus on one kind of knowledge at the expense of others. Companies, like people, cannot be skillful at everything. Therefore, core capabilities both advantage and disadvantage a company.

Customer Capital: the value of an organization’s relationships with the people with whom it does business, or the value of its [the companies] franchise, its ongoing relationships with the people or organizations to which it sells.


A) set of discrete, objective facts about events. Data is transformed into information by adding value through context, categorization, calculations, corrections, and condensation.

B) facts and figures, without context and interpretation.

Enabling Capabilities: necessary [to enter a market] but not sufficient in themselves to competitively distinguish a company.

Enablers of Knowledge Management: systems and infrastructures which ensure knowledge is created, captured, shared, and leveraged. These include culture, technology, infrastructure, and measurement.

Experience: refers to what we have done and what has happened to us in the past.

Explicit Knowledge: formal/codified . . . comes in the form of books, documents, white papers, databases, and policy manuals.

Human Capital: the capabilities of the individuals required to provide solutions to customers.


A) a message, usually in the form of a document or an audible or visible communication . . . meant to change the way the receiver perceives something, to have an impact on his judgment and behavior . . . it’s data that makes a difference.

B) patterns in the data.

Intellectual Capital: refers to the commercial value of trademarks, licenses, brand names, formulations, and patents.


A) a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices, and norms. Key concepts of knowledge are experience, truth, judgment, and rules of thumb.

Actionable information

C) a defined body of information . . . depending on the definition, the body of information might consist of facts, opinions, ideas, theories, principles, and models (or other frameworks) . . . also refers to a person’s state of being with respect to some body of information. These states include ignorance, awareness, familiarity, understanding, facility, and so on.

D) the integration of ideas, experience, intuition, skill, and lessons learned that has the potential to create value for a business, its employees, its products and services, its customers and ultimately its shareholders by informing decisions and improving actions.

Knowledge Interrogators: aka corporate librarian and knowledge integrator; person responsible for managing the content of organizational knowledge as well as its technology. [they] keep the database orderly, categorize and format documents and chucking the obsolete, and connect the users with the information they seek.

Knowledge Management:

A) make an organization’s knowledge stores more accessible and useful.

B) a business activity with two primary aspects: treating the knowledge component of business activities as an explicit concern of business reflected in strategy, policy, and practice at all levels of the organization [and (2)] making a direct connection between an organization’s intellectual assets — both explicit [recorded] and tacit [personal know-how] — and positive business results.

C) conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance.

Learning Organization: term popularized by Peter Senge’s the Fifth Discipline meaning a corporate culture that cherishes continuous improvement.

Market-to-Book Ratio: common method of valuing knowledge intensive companies. Equal to (price per share X total number of shares outstanding) divided by book equity, which is the equity portion of a company’s balance sheet.

Rules of Thumb: shortcuts to solutions to new problems that resemble problems previously solved by experienced workers.

Signature Skill: an ability by which a person prefers to identify himself or herself professionally.

Structural Capital:

A) legal rights to ownership: technologies, inventions, data, publications, and processes [that] can be patented, copyrighted, or shielded by trade-secret laws.

B) strategy and culture, structures and systems, organizational routines and procedures – assets that are often far more extensive and valuable than the codified ones.

Supplemental Capabilities: those that add value to core capabilities but that could be imitated.

Tacit Knowledge:

A) [knowledge] developed and internalized by the knower over a long period of time . . . incorporates so much accrued and embedded learning that its rules may be impossible to separate from how an individual acts.

B) informal/uncodified . . . found in the heads of employees, the experience of customers, the memories of past vendors . . . highly experiential, difficult to document in any detail, ephemeral and transitory.

Technological Capability: term used to encompass the system of activities, physical systems, skills and knowledge bases, managerial systems of education and reward, and values that create a special advantage for a company or line of business.

Value Proposition: the logical link between action and payoff that knowledge mangement must create to be effective. Customer intimacy, product-to-market excellence, and operational excellence are examples.