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Capitalizing on Knowledge - Book Review

1 May 2010

Dr. Moria Levy

The book "Capitalizing on Knowledge: From e-business to K-business," alternatively titled "Creating Capital from Knowledge: From Internet Business to Internet Knowledge Business," was authored by David Skryme in 2001.


Upon initially picking up the book, a sense of disappointment overcame me. A publication from 2001 is nearly considered historical eight years later, particularly in a field like knowledge management, which continues to evolve and consolidate.


Nevertheless, despite this and the book's dense writing, it imparts valuable lessons. It delves into the sale of knowledge beyond organizational boundaries and through the Internet. The principles outlined, originating from the end of WEB1.0, remain relevant even with technological advancements and the surge of WEB2.0 applications. However, some companies mentioned in case studies, particularly Enron, no longer exist.


What intrigues me is that although the book is tailored to K-Business and selling knowledge online, its insights apply to various fields. It serves as a guide on leveraging the Internet, extending beyond the commonplace and trivial.


The book encompasses the following topics:

  • E-business

  • K-business

  • Knowledge-based product

  • Market

  • Marketing

  • Internet Marketing

  • Dilemmas


Navigating through the book's initial chapters may pose a challenge, but clarity emerges as you progress. The acquired knowledge proves to be substantial, making the effort invested worthwhile. Happy reading!


E-business

E-business, the realm of online commerce, has been in its current form for approximately a decade, with its predecessors involving transactions between large organizations in a more rigid EDI framework. Each online trading model is constructed upon five distinct layers:

  1. Connectivity infrastructure

  2. Software

  3. Complementary software services (e.g., the ability to conduct online payments)

  4. Markets for trade (including auctions and buyer groups)

  5. Services offered


The robustness of online commerce is evident in several aspects:

  • Trade transcends time and location, operating 24/7/365.

  • The potential for transferring a substantial amount of knowledge associated with the activity, both before (as a persuasive trade tool) and during the transaction.

  • Reduction of trade costs (e.g., direct banking operations without intermediary bankers).

  • Access to a broad market.

  • Enhanced service capabilities, accompanied by self-service responses (e.g., addressing frequently asked questions).


It is evident that these advantages also extend to customers, leading to reduced service costs and increased availability of their desired purchases.


Despite the potency and benefits, several network businesses have faced collapse, attributed to various reasons:

  • Neglecting customer needs (including real needs, response speed, and issue resolution).

  • Over-reliance on online advertising for marketing, which, while beneficial, may not be sufficient.

  • Unrealistic expectations of rapid wealth accumulation and subsequent irresponsible behavior.

  • Business models that may not always align with operational requirements.

  • Selling at a loss with hopes of future changes.

  • Insufficient supporting systems and processes.


To ensure success, emphasis should be placed on the following aspects:

  • Engaging content.

  • Interest and service elegance.

  • Understanding customers' needs and interests.

  • Leveraging Internet capabilities.

  • A reliable technological infrastructure with prompt response times.

  • A lean and efficient core business model.


K-business

Online knowledge business is a natural extension of general online commerce. The Internet facilitates various knowledge-related activities, including:

  • Creating knowledge (K-creator).

  • Providing an intermediary for knowledge (K-mediary).

  • Integrating knowledge into a package (K-aggregator).

  • Producing a knowledge gateway (K-portal).

  • Ensuring a reliable and high-quality knowledge area (K-refiner).

  • Packaging knowledge (K-packager).

  • Mediating knowledge between factors (K-broker).

  • Publishing knowledge (K-publisher).

  • Operating as a knowledge shop (K-shop).

  • Establishing a knowledge community (K-community).

  • Processing and encapsulating knowledge (K-processor).

  • Becoming a franchisee for knowledge/patents (K-franchiser).


The Internet enables the enhancement of knowledge value through various means:

  • Instant knowledge (updating new information on the Internet faster than traditional media).

  • Meta knowledge, which supplements existing knowledge and aids in orientation.

  • Validated, up-to-date, and reliable knowledge.

  • Customized knowledge tailored to the customer's profile.

  • Contextualized knowledge.

  • Links to additional in-depth knowledge (documents and other web pages).

  • Links to experts and knowledgeable individuals as an additional layer.

  • Concise and processed knowledge.

  • Effective marketing strategies that increase the value of knowledge.


The author references research by Tony Breuer, who identified three ways of trading through knowledge:

  1. Adding value to other services and products sold online

  2. Consulting services

  3. Publishing (newspapers, books, etc.)


The Internet enables the utilization of crucial functions for knowledge-related activities, including connections, communication, content, communities, and commerce.


The success of K-Business hinges on seven key components:

  1. Knowledge assets that are traded and sold.

  2. A business model for the sale of assets.

  3. An incubator provides a stable environment, inside or outside the company, for translating the business model from idea to practice.

  4. A business infrastructure combining stable work with rapid growth rates.

  5. Ensuring a positive customer experience.

  6. Achieving operational excellence.

  7. Building momentum to create a continuum of responses rather than a product's one-time response at a defined time.


Knowledge-based product

Two primary types of knowledge products form the foundation for the sale of knowledge, either independently or in combination:

  1. People-based knowledge – involving consulting and expert services.

  2. Knowledge-based on packages – encompassing magazines, guides, databases, books, and more.


Certain elements enhance the richness and utility of knowledge products:

  • Uniform structure (templates)

  • Embedded links

  • Access to experts (via email and other means)

  • Multimedia components

  • Interactivity, including access to applications and services

  • Instant access when knowledge is integrated into the applications themselves

  • Tailoring knowledge to specific use cases

  • Customizing knowledge based on user profiles

  • Connecting customers to a community of like-minded individuals with shared interests


Properly packaging a knowledge product involves a seamless transition to the product, encompassing:

  • Usability

  • Design

  • Switching capabilities

  • Surveys

  • Community engagement

  • Regular updates

  • Support services

  • Customer service

  • Responsibility considerations

  • Accessibility features


Pricing the product and generating profit can be achieved through various models, whether direct (such as payment for a purchase or subscription), semi-indirect (e.g., receiving advertising rewards) or entirely indirect (e.g., enhancing the value of other products or improving the overall brand image).


Market

Market and knowledge trading already exist in various network configurations, which encompass:

  • Trade in intellectual property and patents

  • Agencies for finding work

  • Management consulting

  • Dissemination of research and analyses

  • Proposals for tenders and works for companies


These markets take different forms, either general or dedicated, such as:

  1. Knowledge tenders

  2. Knowledge malls

  3. Expert websites/Q&A exchange

  4. Trade sites for intellectual property

  5. Stock trading sites (providing tips for market conduct)

  6. E-learning trading sites

  7. Closed social networks and knowledge communities.

  8. Job-finding sites or other knowledge services.

  9. Markets exclusive to the world of content and a dedicated group.


To succeed in a knowledge market, several crucial parameters must be considered:

  • Accessibility of the market.

  • A critical mass of sellers/buyers/knowledge.

  • Proper organization of products, allowing quick orientation.

  • Clear explanations about the products for purchase.

  • Mechanisms for experimentation before making a purchase.

  • Validation measures for product and supplier quality.

  • Emphasis on responsibility over satisfaction.

  • Transparent and fair pricing mechanisms.

  • Simple-to-use payment mechanisms.

  • Remuneration mechanisms (especially relevant for intermediary trading sites that involve new knowledge creators).

  • Facilitation of knowledge sharing between sellers and buyers and among different buyers.

  • A sense of community.


Marketing

In the marketing realm, it's common to discuss the seven components: the 3 C+ and the 4 P. Here's the breakdown of these components with a focus on online knowledge trade:

  1. Customer-Customer (3C+): Understanding the online customer is not always straightforward, and discerning their needs demands wisdom. Customers originate from a vast market space, and without appropriate measures, they may remain anonymous. It's crucial to know the online customer, and even without knowing them by name, it's possible to gauge their desires and interests based on the pages they visit.

  2. Competitors-Competitors (3C+): Online, competitors abound, and they may not always be the ones anticipated. A simple keyword search related to the field of expertise can reveal unexpected competitors. Online trading companies must foster innovation and possess responsive online capabilities to survive. The company should effectively externalize its capabilities on the network.

  3. Companies (3C+): Companies engaged in online trade must be innovative and possess responsive online capabilities, or survival becomes challenging. The company needs to externalize its capabilities on the network effectively.

  4. Product (4P): Analyzing which of the company's products can and should be sold online is crucial. Not every product is suitable. For knowledge to be sold online, it must be well-organized and codified. Sometimes, it's packaged in vertical bundles based on the sector's type.

  5. Price-Price (4P): It is essential to understand what customers value and how much they are willing to pay. With the advent of the Internet, prices have generally fallen, and customer comparison ability has increased. While customers expect lower prices, actual costs in knowledge businesses may have remained the same. Crafting a wise pricing strategy involves understanding the balance and exploring opportunities to provide additional value as an alternative to lowering the price. Dynamic (e.g., time-dependent) price policies can also be managed online.

  6. Place-Location (4P): The place for online trade is Cyberspace, the Internet. Analyzing when to conduct online marketing versus using direct mail, salespeople, or customer managers is necessary.

  7. Promotion-Promotion (4P): Promotion is the most accessible area to begin. Transferring brochures to the internet, strategically placing the URL, optimizing site visibility in search engines, and maintaining and strengthening relationships with potential customers through emails or advanced services are recommended. Adhering to the standard promotion cycle – awareness, interest, desire, and action – is essential.



Internet Marketing

Beyond the general marketing aspects discussed in the preceding chapter, focusing on the Internet world leads to identifying an independent set of rules for Internet marketing. Here are the 10 rules for Internet marketing (10 P):

  1. Positioning: The organization's website on the Internet is a significant showcase. Key pages should effectively represent the company, its products, and the values distinguishing it from potential competitors on parallel web pages.

  2. Packaging: Decisions regarding packaging in Internet marketing involve selling a closed product (e.g., a ready-made guide) or an open product (e.g., consultation). Considerations include producing tailored packages for each sector or relying on a common general product.

  3. Portals – Gateways to Knowledge: Establishing a professional portal within the knowledge content field is possible as part of the marketing process. Before doing so, it's crucial to assess the existence of other portals in the same content field. If none exist, a careful decision must be made on the economic viability of establishing such a portal independently or with a partner.

  4. Pathways – Channels for Knowledge: The vast number of sites on the Internet necessitates selling products and ensuring visibility across various access channels, especially search engines. This activity falls under "SEO," involving rules that continuously evolve and monitor how search engines decide to display favorite sites.

  5. Pages: Ensuring that information and knowledge pages are impressive, captivating potential buyers, and facilitating easy navigation is crucial. Characteristics of an "impressive" page include a clean design, fast loading times, engaging content, easy navigation, excellent content, and encouragement of interactivity. The Look and feel are paramount, including precise user positioning, consistent organization, navigation menus, and judicious use of new effects.

  6. Personalization: Tailoring designated tracks for different target audiences and remembering the importance of existing customers. It is easier to retain existing customers than acquire new ones, so it is advantageous to adapt designated areas for existing customers and customize them based on previous interest/purchase profiles.

  7. Progression: Creating a business model that guides individuals from free viewing to becoming paid users in a phased manner.

  8. Payments: Planning a payment strategy suitable for the network, addressing various issues related to online payments, such as taxation in different countries and additional laws.

  9. Processes: Recognizing the increased importance of processes in marketing and sales. Front-facing interactions are replaced by on-site managed processes, providing direct access to a broad group of employees. Simultaneously, back-office processes synchronize between them.

  10. Performance: Ultimately, performance and business results are the bottom line. The marketing effort should result in a positive customer experience and a fruitful business relationship. Measuring success involves evaluating inputs (investment in site preparation), results (pages viewed and segmentation), and outputs (customer satisfaction and impact on the business aspect). Continuous measurement allows for ongoing optimization and improvement of the marketing plan.


Dilemmas

In navigating the landscape of selling knowledge online, organizations encounter various dilemmas crucial to crafting a successful sales formula:

  1. Innovation vs. Re-exploitation: Balancing the pursuit of innovation with the optimization and streamlining of existing approaches poses a continual challenge.

  2. Organizational Dilemma: Choosing between being an innovative start-up with potential and risks or a traditional organization maintaining conventional operations but seeking an online presence with potentially "old" concepts.

  3. Human Knowledge vs. Automation: Deciding when to rely on human knowledge and trust and when to opt for calculation and automation presents a perpetual dilemma. Each approach has its advantages, and the challenge lies in finding the right balance between them.

  4. Free Access vs. Payment: Determining the boundary between offering free access and charging for services in an acceptable and logical manner to customers, encouraging their willingness to pay.

  5. Ownership of Knowledge: Addressing the question of ownership - whether knowledge belongs to the employee, the organization, or the customer who acquires it. Clarifying who can use it and within what limits is an ongoing challenge.


As we transition towards a knowledge economy, overarching needs for managing knowledge trading emerge:

  • WKO: World Knowledge Organization: At a global level, there is a need for an entity like the World Knowledge Organization (WKO) to regulate knowledge exchange standards between organizations.

  • Third-Party Companies: Consulting firms and similar entities are becoming increasingly pivotal. They sell knowledge about knowledge, providing guides to aid in understanding and facilitating the purchase and consumption of knowledge.

  • Social Networks and the Social Aspect: Social networks, with their emphasis on the social aspect, signify a profound shift in our approach to a knowledge economy and, consequently, to the commerce of knowledge.


These dilemmas and evolving needs underscore the complex landscape of knowledge trading, requiring organizations to navigate a dynamic and multifaceted terrain.

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