It’s easy to use terms like “knowledge management” and “intangible assets,” but few understand what either concept means. “Knowledge management” involves efficiently connecting those who know with those who need to know, and converting personal knowledge into organizational knowledge.

There are many kinds of “intangible assets.” Employee competence is primary because from competence flows patents, concepts, models, and computer systems as well as brand names, trademarks, reputation, and relationships with customers and suppliers.

Successful Hudson Valley organizations are concentrating on managing people and intangibles more than on physical assets. A key challenge is to get workers to share ideas without alienating anyone.

Workers in an office need to communicate and cooperate to build a service, just as factory workers pull together physically to build a machine. Getting workers to share knowledge entails both the management of expectations and collaboration.

Hudson Valley companies must balance two potentially conflicting aims: rewarding their most talented people enough to keep them on board, and at the same time developing pay structures that emphasize teamwork rather than individual effort. Like customers, some employees add more value than others.

Internet technologies have made it easier to locate highly skilled people, but have also made it easier for them to leave your company. Because there are more bidders for their high skills, the price of hiring and retaining the most talented people is rising. Once employees are recruited and hired, “intangible assets,” such as Internet technologies can be a powerful tool for training.

The “intangible assets” of Internet technologies also offer the potential to enhance relationships with employees, suppliers and customers. Taking advantage of these opportunities and building employee, supplier, and customer loyalty can make the difference between success and failure.

Customer loyalty is critical because it is far less expensive to keep an existing customer than to recruit a new one. Using “intangible assets,” when customers have problems, companies can enjoy savings by persuading them to find the answer on-line. Organizations must make sure that they don’t ignore customers who need to talk to a human being on the phone.

“Intangible assets” allow companies to collect and store customer information efficiently and learn more about which customers generate the most profit. Charging all customers the same means, in effect, getting the profitable to subsidize the unprofitable. The Internet, with the wellspring of customer data it collects, often makes this task easier.

When customers are clearly unprofitable, companies must learn to “fire” them. The notion of firing customers makes many Hudson Valley companies uneasy. But the cold hard fact is that a company that loses money on most of its transactions will not be in business for long. Equally true, only those who employ the best knowledge and intangible assets will prosper.

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