Mopsos

It's been quite along time since I published anything on my weblog, because I've been busy working on a KM pilot project, which hopefully is going to become a major change program in my company. We will know this on July 1. 2003.

So in the meantime, I decided to republish one of my old newletters here, because this weblog is actually becoming the place for me to publish my thoughts.

It was published nine months ago. Here it is:

On July 30, President Bush signed into law the Sarbanes-Oxley Act of 2002, sweeping changes to the accounting profession and the business community. The Act brought a new era for the profession, particularly in standard setting and peer review, and stakeholders in the financial reporting process from around the world are meeting to determine the best methodologies for value measurements and reporting, so as to provide investors with more information about what makes a company successful.

The XVI World Congress of Accountants was held in Hong-Kong on November 18-21 2002 around the theme “Knowledge-based economy and the accountant”. This event can be viewed as one of the most important knowledge management events of the year, as it acknowledged the errors of the past, and repositioned accountants away from the power of finance and towards value-added contribution to management. Topics for discussion included Valuing Intangibles, Real-time financial reporting, Transparency, KM and IT Education…

Something very profound might be taking place.

If corporate governance of the nineties had been applied at French aircraft manufacturer Dassault-Bréguet in September 1975, the Mirage 4000 fighter would have never been developed. The chance of making a return on this multi-hundred million dollars investment was too small; the project would have been dropped. And since the Mirage 4000 was subsequently never commissioned by any air force, it would indeed make the case for a tighter financial control of major R&D programs. Or would it?

When Marcel Dassault decided to launch the Mirage 4000 program back in September of 1975, he was not only considering the chances of making a return on this particular investment. He knew that in order to keep his world leadership in aircraft design, he had to keep his engineers permanently busy and always have at least two aircraft developments under way in his Saint-Cloud plant. Participating in the development of an actual aircraft was the best way for young engineers to learn their new job, for the design team to build new relationships, for the company to be constantly on the leading edge of innovation. What he was actually doing was investing in “intangibles”. That was “knowledge management” ahead of time.

In periods of slowdown such as the one we are going through now, two attitudes are thus possible for corporate management. The first well-known attitude is about cutting all spending that is not creating short term value, with the underlying asumption that the long term will take care of itself when times get better. Another attitude is to use some of the spare resources to invest in those “intangibles” that will generate substantial competitive advantage when the economy gets better. That’s what Marcel Dassault was doing. There is nothing new with KM.

So consultants are now telling their clients to focus on their “hidden assets”, their core corporate know-hows which have been very often neglected during the nineties, a period when corporate staffs were spending most of their time talking to bankers and financial analysts, less time giving financial objectives to managers and even less time communicating with –or should I say to- the employees.

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