Blog #10

Knowledge Accounting

It is very important for both managers and investors to evaluate a business from a knowledge management point of view because it gives them a more accurate assessment of the worth of the business. In many cases a business does not account for the knowledge that exists in a business. The amount of knowledge within a company can be considered an asset just like if a company owned a piece of equipment. If you look at a place like silicon valley the businesses in that area would not be worth much if assessed with traditional accounting methods concerning assets but the wealth of knowledge within those businesses is immense. If a investor fails to consider the value of knowledge then an opportunity can be missed. A company with big ideas and the capacity to carry out those ideas can be worth a lot of money in the correct market. Some of our largest grossing businesses in America are based on an idea with very little implementation. Companies like Google and Yahoo are dealing in ideas. Recently a high school student sold his idea to Yahoo for an app he created for millions of dollars. While there was application there Yahoo was really buying the rights to an idea. So how do you quantify something like an idea? Well it is not easy but it does take money to acquire and keep information. A company that is packed with people who are thinkers can be worth more than a business with a large building and fancy equipment. 

Blog #9

The five types of non-financial capital

The five types of non-financial capital are intellectual, social, emotional, cultural and human. Intellectual capital is the difference in value between tangible assets and market value. This type of capital can be seen in workers ability to help grow a business by a worker using their expertise to solve a problem within the business. The importance of intellectual capital is hard to quantify but when there is an absence of intellectual capital it is very visible. Social capital can be summed up in the saying “it’s all about who you know”. The social connections we form on almost a daily basis can have an effect on our lives in a million different ways. I have found in my current search for jobs my chances actually getting a good lead have come from my social circles rather than from a job listing on Monster.com. The people that know me can connect me with their network allowing me quality opportunities. Emotional capital is “feelings, beliefs, perceptions and values that people hold when they engage with any business”. Our interaction with the people surrounding us every day have huge implications on if were successful or not. Having a good emotional relationship at home and work can allow for a greater chance at success in any area of your life. There is a new drive in many industries to provide their workers with a comfortable work place. Companies realize that to retain your workers there must be effort put into the emotional state of the worker. If your workers display healthy emotional signs then they can be more productive and stay longer with the company. Cultural capital refers to “non-financial social assets that promote social mobility beyond economic means”. Things like education, dress and physical appearance are examples of cultural capital. Possessing these kinds of capital can allow a person to be shed in a favorable light within their culture. Working toward building cultural capital can help with advancement in many areas of a person’s life. If you are seen to be educated and well dressed then a person’s perception of you is formed and you are placed in a certain level within that culture. This may seem shallow to some but if you do not appear to be smart or well kept people will have a hard time looking past physical appearance to see who you really are. Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

     All of these non-financial capitals are important in this stage of most college graduates lives. Building capital in yourself can help you gain favor in an interview or make a connection with a person which will benefit you one day. I think one area I am currently exploiting is in building social capital. I was never on Facebook until just recently. I resisted the craze until I felt it could benefit me in my networking to find a job. You never know what connection will be of use so building social capital is what I am striving to do currently.

Blog #8

The success of the knowledge worker
There was a time not long ago when the United States of America lead the industrial age. We were producing the majority of the worlds products and reaping the benefit of our success. My grandfather and grandmother both worked in a Dupont factory. My grandfather started working for Dupont in middle school and retired from the company over 50 years later. Today those kind of factory jobs are in short supply in America and the thought of remaining with one company is something of the past. In todays world nearly every product we use is made in a different country and imported for our consumption. As other countries learned to produce products faster and cheaper than us the American worker had to adapt to the next age. We are currently in a similar transition and if the knowledge worker does not adapt to the coming conceptual age they will not find success.

     The knowledge worker will need to utilize left brain thinking. The left brain allows for big ideas and thinking outside the box. We can look toward examples like Google to gain perspective about being successful in the conceptual age. The most recent edition of WIRED magazine has an entire section dedicated to the most successful and innovative people of our time. Founders of companies like twitter, reddit, YouTube, Facebook and instagram were all featured in the article. These people had big ideas and were able to implement them and now they are the giants of the technology industry. Had these innovators had an analytical outlook their ideas would have never been thought of and we would not be able to enjoy the amazing companies they have introduced. There will always be a use for knowledge workers who are good at analytical thinking but there is now a celling of success for those kinds of people. To improve our selves we must be able to think big and to understand how to solve problems with our ideas. I really enjoyed most of the ideas in this book because I feel like my brain is filled with big ideas that I one day hope to capitalize on. I am glad we are moving into the conceptual age because I think I am more suited for that type of thinking and working.

     American workers have normally dictated the direction the rest of the world takes and to be successful we will have to adapt to the coming times. If we continue with our analytical thinking another country will find a way to be more successful at it and beat us. However it does look like we are still leading the way with all of the successful innovative companies and people we are presenting to the world.

Blog #7

The Expert System and The Neural Network in action.

 The invention of the expert system and more recently the neural network has been providing quick and precise solutions for all types of industries. The expert system allows human like interaction for solving complex problems. The science is not perfect but these tools can be utilized and produce great results in certain tasks.

              

           One example of a real world expert system is in the agriculture industry. Every year farmers are faced with decisions that could make or break them financially. The success of their industry is dictated by the weather, crop prices, soil conditions, gas prices and millions of other factors. While being successful in many of these areas require predictions there is a specific science to many of the variables. Attempting to contemplate all of the scenarios that can happen would be very taxing for a human. This is where the expert system comes into the equation. Farmers can become experts in their own field when making decisions with the aid of the expert system. The expert system has the ability to reason like a human and the ability to interact like a human expert with the user. This is very helpful for man farmers who may be experts in the planting and harvesting side of the business but require an expert’s advice in the financial and crop market side of the business. The main advantage to the farmers is the expert system has the ability to process uncertain information. The farming business is riddled with uncertainty and any advantage a farmer can get with predicting the future he will take.

               

            Neural networks are becoming more and more prevalent within our world today. We live in a time where security is becoming more paramount due to the rise in attacks and violence. Security cameras are taking over the streets and public places. I recently saw the implementation of a neural network in a new security program for airports and train stations. The system utilized neural networks by tracking a person when they are in the frame of the camera and sounding an alarm if the person leaves a bag unattended. The neural network is able to recognize a person and understand when the person has actually left a bag behind. The network uses its ability to scan and read a moving object for a video feed and reason when the person has parted with something. It marks the person while also keeping track of the bag the person is carrying. The neural network uses both programmed data and real time images to perform a task.

               

          Both of these systems have their own place in solving specific tasks. However, I think the neural network will continue to expand because of its versatility. Being able to adapt in todays technology world Is key to being successful.

Blog #6

Web 2.0 and open source textbooks

             

        I think Web 2.0 and open source textbooks could benefit education if done correctly. The most interesting part of the open source text book is the idea of a school having the ability to edit and mold the content to the student’s needs. The ability to edit the text can allow for revision of the text by the school without having to purchase new editions of the text every year. In many cases the text book company will make very small changes and call it a new edition in order to generate revenue. Also, a teacher can cater to the learning styles of individual students by revising the text. The open source format would also allow schools to direct funds toward other worthwhile programs within the school.

One hurdle I think teachers may face is with the school boards and management within the schools. Many principles and school boards like to have a hand in the curriculum and books which teachers use. The concept of open source textbooks may be an easier sell in the upper level grades. Also, the quality and authenticity of an open source book could become a problem. Without a reliable publisher behind these books many parents and principles may become skeptical about the content of the books.

               

         While I am the first to complain about the astronomical prices of textbooks I worry that creating a world where textbooks are completely open source and free will create sub-par material. I think the best thing that could happen is that the textbook publishers feel the pressure form the open source movement and lower their prices and become more innovative in how they present their content. I think that is the only way they will be able to sustain a text book market in the new web 2.0 era. I think the downside to that scenario is if they are not able to stick around and free content is the only available content. Think of it this way network tv is a sort of open source media outlet. It is free but the best shows on television are on cable or satellite. It is like the old saying you get what you pay for. For the open source idea to be of high quality there has to be some revenue stream present. If you think about it most of the open source outlets we use capture revenue in some other way. For example Spotify or Youtube are free to use but at the price of watching or listening to advertisement.

               

           I think the web 2.0 is a great movement and I think open source text books are an exciting new development. I am excited to see how far it will go in the coming years.

Blog #5

Text Mining

               Most businesses in the current age are overcome with massive amounts of data. Much of this data is useless to the business or discarded because there is not enough man power to sort through the data. In some cases the business does not even understand how to use the data. Text mining is a great tool that can allow a business to harness the power of information contained in available data. Data is all over the internet. Places like Twitter, Facebook and Google searches all contain data that a business could utilizes to grow their business. Having the ability to predict trends or understand what people are wanting out of a product or service is invaluable.  

                For example an e-business which utilizes data gathered from consumers who visit their website can create competitive advantage. When a returning or potential customer visits a business’s website they leave a trail of data. This data can be used to present products or services that the browsing customer has showed interest in. Providing a customer with products they are not interested in is a waste of resources and can also create a situation for missed sales. Having the ability to map a customer’s interest with the data they generate allows a company to target those interests. This utilization of data saves the company valuable resources and can generate more profit at the same time. The last company I worked for was a boat dealership. We would periodically send out an email with the boats we were selling to customers in our database. We had a service that would collect data on the people who opened the email as well as what boats they were viewing. This data allowed us to understand what boats the customer was most interested in and allowed for more accurate marketing.

                Another area that utilizes text mining is businesses that have large amounts of data like an insurance company. An insurance company can use text mining to isolate patterns in data that can help them form better policies for the future. It can also detect areas of fraud. If similar language or large amount of claims coming from a certain person can be gathered then a pattern of fraud can be detected and investigated. Also generating a pattern of the types of accidents in a certain geographic location using collected data can allow the company to address current policies in a certain area.

                Text mining is also used by governments. The intelligence community of any government can use text mining by sorting through data to gain information about other countries actions. Being able to extract specific data from mountains of information can allow a for faster response time to threats or prevention of conflicts. Governments collect large amounts of data and much of it is unwanted or unused but text mining can be used to highlight the data that may be relevant. 

Blog #4

Flat Earth 3.0

      I thought Dr. Friedman’s talk at MIT was extremely interesting. I did not fully expect to be so interested in the subject but before I knew it I had watched the entire speech. As Dr. Friedman explained the evolution of our world going from a “download” world into an “upload” world I realized I experienced that evolution but had not recognized it. He mentioned one of the turning points for our world becoming “flat” was in August of 1995 when Netscape introduced the first web browser. I was 11 years old and I can remember surfing the web at my dads office for the first time during this era. The evolution Dr. Friedman talks about has moved so quickly it has been difficult to recognize the changes that have occurred globally. He mentioned that in the three short years he stopped covering globalization to write about the Mideast he was astonished at the changes that happened in that short time span. 

       

    The new “flat” earth Dr. Friedman speaks about has given an individual with an internet connection the ability to share the content they created with the entire world. This idea was not possible a very short time ago when the were very few channels which connected the world. His experiences with people he has meet during his travels were very entertaining. His story about the driver who had his own website in multiple languages shows how if an individual has the imagination and ingenuity anything is possible. 

  

     As Dr. Friedman reached the 40 minute mark in his 47 minute speech was when he lost me. Obviously Dr. Friedman believes strongly in the theory of man made global warming and he spent the last part of his speech talking about the “green revolution”. I am not sure how this was related to the subject he spoke on for 40 minutes. Earlier in his talk he spoke about how important he thought free trade was but ended his speech with how we needed a real green revolution and the only way this could be done is with legislation, laws and taxes all of which hinder free trade. Obviously Dr. Friedman is a brilliant man but sometimes when a person is involved heavily in a cause they believe to be true they abandon common sense. I can only assume the reason he brought up this subject was to plug his next book about green technology. 

     Other than his off topic rant at the end I thought Dr. Friedman’s talk was brilliant. As a country we need to recognize how the world as flattened to remain the global leaders in trade and innovation. Individuals made this country great and now that we have access to the entire world as individuals we should be able to continue to climb as a country. We have some of the brightest minds on the planet and if we could get our Government out of the way or on board with this idea who knows how far we will be able to advance.

Dr. Friedman's talk at MIT can be seen here.

Blog #2

Is information technology a source of competitive advantage?

            I would argue yes. I think the biggest evidence of IT being a source for competitive advantage is within small business. Not too long ago a small business start-up required a good business plan and renting or buying a building in a high traffic location. Gone are the days of brick and mortar stores being a requirement to start a business. Information technology has allowed anyone with a work ethic and a good idea to become a business owner. There are thousands of successful businesses around the country that do not have a physical location for customers to visit and yet they are thriving because of the online market place.

            When I was 21 years old I opened my first business. I went to work straight out of high school and saved nearly every penny for four years. My brother in-law was one of the best local farmers in the area and I took on the challenge of selling his produce. I took the money I saved and rented a building, had a porch constructed and started advertising. We operated for almost a year without losing any money. I felt like we had established a customer base and were beginning to grow. I was looking forward to turning a larger profit and even hiring an employee to run the store so I could have a couple of days off a week. However, one day I learned the largest produce market in the area was building a new store down the road from me. This competitor was well established and had a large bank roll. I had zero competitive advantage. This news scared me and I decided to close my store instead of trying to take on the giant.

            I share my story because I believe if my business had been online I could have continued to operate by building a web presence and making transactions online. Information technology allows people from around the world to view and buy your product or service. A large part of my operating cost was rent, utilities and the time spent at the physical store. Not having all of these expenses could allow a business to have a competitive advantage. Also, automated transactions cut time and cost out of the buying process. I spent a large amount of time checking out my customers at the register and wasted a lot of time waiting for customers to enter my business. With an automated service customers can make transactions at any time of the day or night only requiring an employee to fill the orders.

            Information technology also allows a small business owner to forego the fear of sinking a large amount of cash into a start-up business. Anyone can create a website now days at little to no cost. This gives the owner the ability to focus on the product or service. If the business does not work out minimum loss was incurred by the owner.

            I hope to own another business one day and I believe having a store run by information technology will give me a competitive advantage that I did not have my first time around.

Blog #1 Increasing Returns

Over the past two decades we have seen an explosion of new technology around the world. With this new era has come the uprising of knowledge based industries. For so long the world has been accustomed to production being defined by physical goods like soy beans or lumber and with this the law of diminishing returns has applied. As the production of knowledge based products began to rise, it became apparent that the idea of diminishing returns could not be applied to this new area of production.

        The principle of increasing returns is the idea that a product will continue to profit as sales grow. Unlike a regular commodity, having to produce more because of increased sales does not hinder the producer. Also, a knowledge based product has the ability to keep consumers loyalty much easier because of the effort a user must put forth to become comfortable using that product. A product with diminishing returns could pull consumers loyal to other producers by simply lowering the price of their product. Fear of a new company emerging or a cheaper version being released is not as much of a concern for producers of knowledge based products like it is with a product under decreasing returns. A user exerts much effort and time to become familiar with a certain system; this investment is what keeps a consumer from jumping from one manufacture to another.

                Another large distinction between diminishing returns and increasing returns is with the production of new and better products. With a traditional product under diminishing returns, normally the newest and most improved product takes the place of older outdated products. This is not so with increasing returns. For example, if a new competitor to Twitter arises and it has a better layout, allows for the use of more characters, and is superior in every way, this does not guarantee success in the knowledge based market. According to NBCnews.com Twitter has 175 million users. This means that even if a superior “micro-blogging” site was created, no one would be using it and the chance that the new site would convert every Twitter user or reach 175 million new users is almost impossible. 

              Many believe this type of market creates a monopoly in every different sector. However, these “monopolies” are very different from the traditional monopolies of the past. A monopoly in an increasing return economy benefits the consumer but blocks new competition from creating a similar product. More options are available for the user but eventually competitors fade away because of lack of use. This is because the majority of consumers are using the dominate product. In a traditional monopoly the consumer only has one option which allows the business holding the monopoly to over charge and under deliver on service but in this situation the consumer has access to good pricing and quality products because the company on top wants to remain there.

                In conclusion, the landscape of products and the economy which surrounds them may be changing but in my opinion it is a welcomed one. While it is difficult to quantify an increasing returns market I don’t think that should be a reason to dismiss or fear this type of system. With the increase in technology and knowledge based systems comes uncharted territory but I think it also brings progression we should all embrace.

Caleb Wiles-