This document provides an introduction to Knowledge Resources Management (KRM) and the concept of return on investment of knowledge (ROIK). It discusses how knowledge is often undervalued in organizations despite its importance. The value of knowledge is described using formulas that calculate benefits and costs. Strategies are presented for implementing KRM practices like knowledge mapping and portfolio management to better capture ROIK. The goal is to manage knowledge resources effectively by understanding, measuring and communicating its value and impact on organizational performance.

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The Value of Knowledge
A quick flyover, and introducing
Knowledge Resources Management (KRM)
Tim Wood Powell
President, The Knowledge Agency® (TKA)
Author, The Value of Knowledge
M a k e k n o w l e d g e w o r k .
211018

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Today’s Roadmap
What is…
…“the economics of
knowledge”?
…the purpose of
knowledge?
…the value and ROI
of knowledge?
…Knowledge
Resources
Management (KRM)?
2

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If it is so
valuable,
why is
knowledge
often…
Under-appreciated
Under-utilized
Under-resourced
“Under the radar”
§ not on organization charts
§ not in financial statements
§ not top-of-executive-mind
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Because…
KNOWLEDGE SUPPLY
Producers
KNOWLEDGE DEMAND
Users + Sponsors
Senior Enterprise Leaders
do not “get” the value of
knowledge
➊
Knowledge Professionals
do not “get” the value of
knowledge
➋
Knowledge Professionals
do not effectively “sell”
the value of knowledge
➌
4
EXCHANGE

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The Knowledge Value Chain
SUPPLY SIDE
Producers
SOURCE: Powell, The Knowledge Value Chain® Handbook
DEMAND SIDE
Users + Sponsors
COMMUNICATE
WHAT?
Knowledge Mission,
Projects, Tasks
WHY? SO WHAT?
Knowledge Purpose
EXAMPLE: “Grow the hourly
revenue of our professionals”
Knowledge-Value Gap
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The power of purpose
NASA’s Apollo program
6
September 12, 1962
“We choose to go to the
moon in this decade…not
because [it is] easy, but
because [it is] hard.”
JFK, Rice University
July 20, 1969
Commander Neil Armstrong
and pilot Buzz Aldrin land
on the moon – and return
safely to earth.
Vision infused
with a strong
sense of
purpose
Risk-taking and
innovation
Organizational
dynamism
Collaborations
and spillovers
across multiple
sectors
Long-term
horizons and
budgeting that
focused on
outcomes
A dynamic
partnership
between the
public and
private sectors
A P O L L O K E Y AT T R I B U T E S

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Value of
knowledge
(VoK)
principles
scale across:
§ Enterprise
§ Team
§ Individual
§ Product
7
CO
M
PLEXITY

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What is value?
Value (V) of Knowledge = ROI of Knowledge (ROIK)
ROI = Return on Investment
ROI = V = B/C
Return = Benefit (B) “What you get”
Investment = Cost (C) “What you give”
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Return
Investment

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ROIK illustration
“Knowledge for knowledge’s sake is a noble pursuit,
but not if it cripples you financially.”
WJ Journal Opinion, August 10, 2021
Post-Program Salary
Net Debt
Get
Give
V = B/C
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Knowledge benefits and costs
TANGIBLE
BENEFITS
§ Problems solved
§ Resources saved
§ Products enabled
INTANGIBLE
BENEFITS
§ Better decisions
§ Insights and awareness
§ Collaboration
§ Culture development
TANGIBLE = direct and more readily measureable
INTANGIBLE = indirect and difficult to measure
B EN EFI TS ( B ) CO STS ( C)
T
A
N
G
I
B
L
E
(“HARD”)
I
N
T
A
N
G
I
B
L
E
(“SOFT”)
TANGIBLE
COSTS
§ Hardware
§ Software
§ Licenses
§ Personnel
INTANGIBLE
COSTS
§ Time
§ Effort
§ Attention
§ Opportunity costs
SOURCE: Powell, The Value of Knowledge
10
§ Increase Benefits
§ Decrease Costs
V = B/C

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The value of knowledge – a flash intellectual history
CLASSICAL
ERA
4th Century BCE
Socrates, Plato, Aristotle
“Knowledge for its
own sake”
ACADEMIA
INSTRUMENTAL
ERA
16th Century
Bacon, Newton
“What can knowledge
do for us?”
SCIENCE
HYPER-
INSTRUMENTAL
ERA
21st Century
Machlup, Winter
ENTERPRISE
“What is the return on our
knowledge investments
(ROIK)?”
11

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Major prevailing attitudes toward ROIK
§ Where are you?
§ Where is your management?
§ Where is your senior leadership and culture?
12
“Knowledge is
not real”
Accountants
GAAP, IFRS
0.0
“ROIK is real
and can/must
be measured”
ROIK Empiricists
Hyper-Instrumental
Mindset
3.0
“ROIK is real,
but cannot be
measured”
ROIK Believers
Instrumental Mindset
2.0
“ROIK is not
relevant”
ROIK Agnostics
Classical Mindset
1.0

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Lessons Learned
2020
You don’t have to “believe in”
a virus to have it
weaken, or even kill, your body
2000, 2008
You don’t have to “believe in”
ROIK to have it
weaken, or even kill, your career
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Why am I a 2.7? (situational empiricist)
14
of ROIK measurement
§ AXIOMATIC: What you would
manage, first you must measure
o What is countable, is accountable
§ DEFENSIVE: Inoculates you
against the “ROI virus”
o Prepare for those conversations
that you do not control
§ POSITIVE: Enables you to
optimize your knowledge portfolio
of ROIK measurement
§ Can be substantial
o In Time, Effort, Attention, Money
§ Unintended consequences
o Gaming the metric
CAN ≠ SHOULD ≠ MUST

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Measurement
§ Our goal is not measurement per se,
but management
§ Does not have to be numerical
o Can be relative – HI-MED-LO
o Or comparative – Improved-Same-Worse (than previous)
§ Can include non-economic benefits (e.g., societal) –
double materiality
§ Should always be demand-side driven
o Users
o Sponsors
15
MEASURE
MANAGE
Allocate resources
efficiently and effectively
(“Do the right things”)

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Strength of ROIK case
STRONGER
FORM
WEAKER
FORM
FINANCIAL
ROIK linked to ROIE
TRUST-BASED
Classical View
TANGIBLE
ROIK linked to KPIs
Measurable
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R O I K c a s e
C
r
e
d
i
b
i
l
i
t
y
ROIE = enterprise ROI
Knowledge contributes directly
to the value stream
KPI = Key Performance Indicator

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Physical
Resources
Management
§ Plant
§ Equipment
§ Inventory
Human
Resources
Management
Financial
Resources
Management
Do we give knowledge its “due diligence”?
LAND LABOR
CAPITAL
KNOW-
LEDGE
44%
Knowledge
Resources
Management (KRM)
§ Data
§ Information
§ Knowledge
§ Intelligence
Fundamental
Enterprise Resources
17

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Knowledge Resources Management (KRM)
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18
Benefits
Mapping
V = B/C KR Triage
KR Mapping
TO
O
L
See also Milton and Lambe,
Knowledge Manager’s Handbook
See Powell, VoK
Knowledge Balance Sheet
MAP
Inventory
knowledge
resources (KR)
§ Activities
§ Assets
§ Products
➊ LINK
Align knowledge
resources (KR)
§ with enterprise
products and
strategies
§ with KPIs
§ with user needs
➋ MEASURE
Assess ROIK
§ User benefits
§ Costs
➌ MANAGE
Optimize
knowledge
resources (KR)
portfolio
§ Add to winners
§ Prune “stagnants”
§ Weed out losers
➍

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Knowledge Resources (KR) Mapping
PRODUCE
MANAGE
USE
COMMUN-
ICATE
ACTIVITY CLASSES
PCUM
We conduct these four kinds of activity
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CONTENT*
CHARTER
USERS
CHANNELS
PRODUCERS
ASSET CLASSES
UP-C3
…using these five kinds of asset
PEOPLE

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Knowledge Resources (KR) Portfolio – products*
KP.1
KP.3
KP.8
KP.6
KP.5
KP.4
KP.2
KP.7
Hi ROI
Med ROI
Lo/Neg ROI
M
E
A
S
U
R
E
BUY (Invest)
HOLD (Adjust)
SELL (Divest)
M
A
N
A
G
E
Size = resource budget
20
Time value of knowledge investments
*Products are the means of exchange for our knowledge. Drucker

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Optimize your Knowledge Resources (KR) portfolio
CONTENT ASSETS TRIAGE MATRIX
1. Have, need, but require
further development
OPPORTUNITY: Value
Enhancement
2. Have, but don’t need
OPPORTUNITY: Cost
Reduction and/or
Reallocation
3. Need, but don’t have
OPPORTUNITY: Resource
Acquisition
4. Have, need,
development OK
SOURCE: The Knowledge Agency, client case file
DEVELOP
INVEST
DIVEST
STAY THE
COURSE
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Describes
28 strategies
for building
knowledge
value
Includes dozens of tools and templates
for addressing ROIK and all four key KRM elements –
plus much more
Contains less than 1% math
Hard
Soft
A lessons-learned compendium and advocacy manifesto…
22

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What to do?
DO DO NOT
Lean into ROIK conversations Be an ROIK denier
Check in regularly with your
demand side (users and sponsors)
Ignore users’ changing needs
Focus on tangible, sustainable user
benefits
Rely on abstractions, hopes, and
promises
Manage your knowledge resources
as a business
Be an artisanal, overhead cost
center
23

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Our problem is not that we lack knowledge.
Our problem is that we use the knowledge(s)
available to us so ineffectively.
24

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Want to dive deeper?
book The Value of Knowledge (2020)1
vok blog TimWoodPowell.com2
tka KnowledgeAgency.com
youtube Tim Wood Powell3
contact tim.powell@KnowledgeAgency.com
Catch me virtually at KM World – November 18th, 2:00pm ET
1 Especially Chapter 5 “Increasing Knowledge ROI”
2 Topics “Knowledge Strategy,” “Metrics and Measurement”
3 Video “The Purpose of Knowledge”
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M a k e k n o w l e d g e w o r k .