Learning Organizations

Chapter 6

Having a Mindset of Knowledge Capital

As Paul Strassmann1 points out, companies should be focusing on identifying and increasing the level of what he calls “information productivity,” which he considers a key index of a company’s strength or weakness. According to Strassmann, senior management should be measuring the value added by information

[Net Profit – (Financial Capital Assets × Interest Rate for Borrowing)/ Cost of Information Management or Cost of Sales, General & Administrative + Cost of R&D]

Unfortunately, more companies are destroying knowledge assets than actively generating them. The problem is that our narrow-minded dependence on traditional accounting principles has failed to account for knowledge in any meaningful ...