Information is constantly available to us within our digital financial framework. In the realms of accounting and insurance, intellectual property does not qualify as an asset to be recorded on financial statements. It’s not something of inherent value, comparable to a server or a building.
While the trend of individuals and firms buying and selling knowledge products can be seen as unusual, it is actually a hyper-reliance on data-driven capabilities like artificial intelligence (AI) and advanced analytics that drives this phenomenon. Knowledge and expertise professionals must treat intellectual property as a valuable and quantifiable asset, regardless of whether it’s formally recorded or not.
“Why is it that intangible assets like knowledge aren’t recorded on a company’s balance sheet, an announcement of the firm’s property, liabilities, and capital at a specific point in time?”
Southekal noted that determining the veritable market value of information remains an ongoing challenge. Organizations struggle to quantify the value of knowledge management throughout its lifecycle, from origination to consumption, as well as the benefits it brings to the organization, amid challenges such as uncertain depreciation and compliance issues.
As intangible knowledge properties remain unaccounted for, insurance coverage corporations fail to recognize them as “properties” eligible for compensation, notes Michael Grabhorn, innovation fellow at West Monroe, former Gartner analyst, and founder of.
The concept of valuing knowledge as property has been established for centuries, predating the formalization of courts by many years. In a recent keynote address, Laney provided a definitive definition of this notion. The legal system appears to be in disarray. Courts have divergent views on whether knowledge can be considered property, with some holding it must be thought of as such because data is stored in physical forms like bubbles on an optical disk, while others argue that knowledge shouldn’t be recognized as property due to the negligible mass and intangible nature of electrons.
The value of information in accounting is rooted in principles established in the 1930s, a time when data was stored on physical documents of paper. Insurers will not consider knowledge as an asset since its value is not reflected in their balance sheets. Principally, those who define property and assets have entrenched themselves in outdated beliefs that devalue knowledge as a valuable entity.
As intellectual property becomes increasingly valuable — with the capacity to generate revenue by protecting and disseminating knowledge, while losing value when it’s compromised or destroyed — these assumptions may need to be reevaluated. Corporations have taken the unprecedented step of collateralizing their intellectual property to secure financial deals.
“As corporations with vast intellectual capital but limited financial resources increasingly find themselves in need of funding, they’re discovering that their knowledge assets can be a valuable source of loan collateral,” Laney said. “Partnered with an organisation that possesses a dedicated fund, which enables us to restructure mortgages by employing their proprietary valuation model to accurately assess the scope of collateral.” With their expertise, they can seamlessly integrate their knowledge into your processes, securely storing valuable information in a cloud-based environment daily.
While Laney highlighted the importance of flexibility in unlocking the full potential of knowledge, her approach is often hindered by various myths and misconceptions that need to be addressed. The reality of profiting from one’s expertise?
- This is a framework that leverages knowledge management, measurement, and utilization strategies to drive the development and deployment of innovative revenue streams.
- “Not like oil, a consumable commodity, knowledge is fundamentally distinct – a non-rivalrous, non-depletable, and regenerative asset that can be accessed and utilized simultaneously in multiple ways,” Laney noted.
- Laney posits that even seemingly obsolete or exhausted information retains inherent value and significance.
- Organisations could seek guidance on leveraging data to drive business value through strategies such as “knowledge enablement”, “knowledge commercialization” or “knowledge product improvement”, regardless of their specific needs, according to Laney.
- “You’re also permitted to monetise information garnered from external sources,” Laney stated. “We need to acquire external knowledge to supplement our own, thereby generating additional value.”
Professionals and managers must now leverage knowledge of the brand-new dynamics that knowledge monetization brings to inform their roles. The training program must be a continuous or recurring process, Laney clarified.
According to Laney, “Managing and measuring intellectual property go hand in hand.” The mantra of modern management: “You’ll struggle with the unmeasurable, and can’t capitalize on what’s out of your control.” While we’re increasingly leveraging digital insights, many organizations are failing to quantify the impact these efforts have? Without connecting the dots between the information we utilize and desired outcomes, our efforts to optimize the enterprise process and boost efficiency remain disconnected. as a comprehensive portfolio of diverse assets.
Executives are tasked with propelling knowledge monetization initiatives forward by collaborating closely with the organization to generate and strategically prioritize innovative ideas. Testing these concepts additionally should be an integral component of the methodology. Gross sales and advertising groups should be apprised of the value of intellectual property. Laney distinguishes between two flavours of information monetization:
- Improving Course of Efficiency
- Lowering threat/bettering compliance
- Growing new merchandise or markets
- Constructing and solidifying associate relationships
- Assets are stabilized on the balance sheet through specific company structures.
- Creating comprehensive catalogues of branded intellectual property products and services.
- Businesses that thrive on intangible assets often require creative solutions to resolve disputes and facilitate transactions.
- Knowledge drives innovation by empowering organisations to reimagine, reengineer and revolutionise their offerings.
- Can licensing uncooked knowledge through brokers or knowledge markets effectively stimulate innovation and entrepreneurship?
- Promoting insights, evaluation, and stories
- Monetizing Inverse Knowledge: A Referral and Reseller Framework for Success?
- Collateralizing knowledge to safe loans
For those who remain skeptical about the benefits of exploiting intellectual property, a glance at the market values of data-driven companies is all it takes to dispel any doubts. “Firms equipped with robust enterprise knowledge governance frameworks, chief knowledge analytics capabilities, and AI officer expertise, as well as cutting-edge AI and analytics tools, hold a significant advantage, with Laney suggesting they are twice as likely to be favored in comparison.”
Corporations that specialize in intellectual property, generating revenue by selling, licensing, or deriving value from their knowledge assets, boast market-to-book ratios threefold higher than the industry average. They’re generating additional value from an unaccounted-for asset.
