Posted:August 31, 2005

Open Source and the ‘Business Ecosystem’

Customer solutions generally can not be supplied by an individual vendor — no matter how large — because of the diversity of innovation taking place and the diversity of customer needs. In the past few years, many business schools have embraced the concepts of “networked economies” or “business ecosystems.” [1] As noted by Carl Shapiro and Hal Varian, “There is a central difference between the old and new economies: the old industrial economy was driven by economies of scale; the new information economy is driven by the economics of networks…”[2]

The concept of “business ecosystems” offers rich metaphors drawn from ecological science for helping companies to understand their roles and the importance of partnering. A Harvard Business School seminar helps explain some of these concepts: [3]

“As with biological ecosystems, business ecosystems are formed by large, loosely connected networks of entities. As with species in biological ecosystems, firms interact with each other in complex ways, and the health and performance of each firm is dependent on the health and performance of the whole. Firms and species are therefore simultaneously influenced by their internal complex capabilities and by the complex interactions with the rest of the ecosystem . . . .rather than establishing a static and clear boundary between ecosystems, as we often do for the boundary between industries, it is better to gauge the degree of interaction between different firms and depict ecosystems as communities of firms characterized by a given level and type of interaction (e.g., market relationships, technology sharing and licensing agreements, etc.).”

As with other thinkers in this area, the HBS scholars recognize three types of firms:

Dominators, which gobble up other firms and attempt to occupy all competitive niches. Systems with dominators tend to be fragile and overtaken by systems characterized by the following two types of firms,
Keystones, which provide enabling platforms or other capabilities that help leverage others to partner or innovate, and
Niche players, the bulk of the firms, that themselves can also provide enabling keystone capabilities.

In business ecosystems, most firms should follow niche strategies. The HBS scholars go on to note:

“A direct implication of our framework is that the performance of a firm is a function not only of its own capabilities, or of its static position with respect to its competitors, customer, partners, and suppliers, but of its dynamic interactions with the ecosystem as a whole. Our approach therefore directly tackles the collective impact of network interactions of ecosystem participants on the operating performance of the firm.

“. . . ¦technological innovation literature often focuses on the firm’s reaction to novelty as an exogenous threat that leads to catastrophic change. In this way, it fails to capture the ways in which firms can influence the changes, offer solutions to multiple ecosystem participants, or buffer themselves through connections with their business partners and competitors. It emphasizes internal capabilities, rather than the integration of these capabilities with external network relationships.”

“The fundamental advantage of a niche player is focus. Niche players focus by leveraging the services provided by the keystones in their ecosystem, and by concentrating on the acquisition of business and technical capabilities that directly support their niche strategy.”

Marco Iansiti, expanding on these themes in a later paper, Managing the Ecosystem,[4] provides three factors for measuring the effectiveness of a business ecosystem:

Robustness is the ability to survive disruptions and unforeseen changes. A robust ecosystem provides its members with a buffer against external shocks and provides a degree of predictability. A crude measure of robustness is the survival rate of ecosystem members, such as customers, suppliers, and distributors. One of the challenges a company faces is its dependence on fragile areas of its ecosystem. In 2001, Cisco, for example, was saddled with more than $1.5 billion in surplus inventory when one of its customer domains went out of business.

Productivity is the ability to consistently transform technology and other raw materials, such as labor or process, into lowered costs, new products, and functions. This can easily be measured by return on invested capital. Over the past decade, software companies, for example, averaged a return of more than 10%. Productive partners tend to be better partners, which will invest more in innovation.

Niche creation is the ecosystem’s ability to create new, valuable functions and foster diversity that creates real value. High-technology companies, for example, tend to embrace innovation, which has created ongoing opportunities for the development of new domains in an ecosystem. Business executives can look to applications to provide insight into the innovative potential of different classes of partners, suppliers, and customers.

He goes on to state:

“An ecosystem-based perspective makes clear the importance of interdependency in today’s business environment. Stand-alone strategies no longer work. A company’s performance is increasingly dependent on its ability to influence assets outside its own direct control. If a power position is used to dominate and take over a network, then value is drained from that network. Keystones, in contrast, know how to exercise the power of their position indirectly, and in cooperation with others within their ecosystem to create value for all its members.”

As in biological keystones, business keystone players are not necessarily the largest or most visible organisms. Keystone players often “punch above their weight.” Rather than size or visibility, look to the degree of linkages. Keystone players are the ones at the hub of many interconnections.

Two powerful means for promoting or joining a business ecosystem is through partnering and alliances or embracing technology standards. The open source movement combines elements of both.

Partnering and Alliances

For example, Cisco, among others, has been a leader in establishing what is required for ‘ecosystem’ synergies and partnerships: “Strategic alliances allow companies to offer complete solutions while still maintaining their focus on their core competencies. Today’s leading companies are no longer trying to be everything to everyone. Instead, they increasingly focus on doing one thing (or a few related things) well, rather than spreading their energies over a vast array of offerings.”[5]

Partners and allies protect and sustain one another, provide additional means of business and market intelligence, all leading to more robust environments.

Technology Standards

Another factor that promotes adaptive business ecosystems is technology standards. The trend of business ecosystems and interoperability requires adopting keystone standards and working with business partners with complementary competencies that have also embraced these standards. As Iansiti and Levien go on to conclude:[3]

“To the extent that niche players focus their own activities narrowly on a specific domain, while using existing solutions for everything else, they improve their own productivity and efficiency. This has important implications for product architecture: niche firms need to view their products not as standalone entities designed from the ground up, but as ‘extensions’ of an interconnected network of elements in which conventional product boundaries may not be distinct or clear.”

Open Source: All Ecosystem Aspects

Open source combines the network, alliance and technology standard aspects of robust business ecosystems. In addition, because of its inherent commitment to interoperability, open source software more often than not plays the role of a keystone technology in this ecosystem. This is especially true for LAMP (Linux-Apache-MySQL-Perl/Python/PHP) and related systems.

It is interesting to note that the European Union has adopted the Digital Business Ecosystem (DBE), http://www.digital-ecosystem.org/html/, a 14 million (Euro) 3-year research project supported by 20 partners from 10 EU member countries. It involves harnessing well-known principles of self-organization and self-optimization, taken from various fields of science and nature, and applying them to the interactions between businesses. The effort is being mediated by open architectures and standards.

Adaptive business ecosystems promise to be more stable, last longer, and respond better to external change. These factors suggest an excellent robustness for open source systems, initiatives and players. That is not to say that all open source players will survive; indeed, many will not. But it does mean that an alliance with open source may on average increase an individual company’s likelihood of survival.

Further Reading

The references to this posting are all worth a look. There is a longer treatment by Iansiti and Levien that has many useful references.[6] Also, for a lengthy review of the current literature, see Peltoniemi’s, Business Ecosystem: A Conceptual Model Of An Organisation Population From The Perspectives Of Complexity And Evolution.[7]

[1] S.E. Gothlich, “From Loosely Coupled Systems to Collaborative Business Ecosystems,” paper No. 573, University of Kiel (Germany), May 2003. See http://www.bwl.uni-kiel.de/grad-kolleg/de/kollegiaten/goethlich/Business%20Ecosystems%204b%201,5Z.pdf

[2] C. Shapiro and H. Varian Information Rules. Cambridge, MA: Harvard Business School Press, 1998.

[3] M. Iansiti and R. Levien, “Keystones and Dominators: Framing the Operational Dynamics of Business Ecosystems,” Harvard Business School Seminar, November 2002, 83 pp. See http://www.hbs.edu/units/tom/seminars02-03/Marco_Nov_2002.pdf

[4] M. Iansiti, “Managing the Ecosystem,” Optimize Magazine, February 2005, Vol. 22. See http://www.optimizemag.com/article/showArticle.jhtml?printableArticle=true&articleId=59300381

[5] For more information on Cisco’s view of the Internet ecosystem, see http://business.cisco.com/prod/tree.taf%3Fasset_id=85949&ID=85949&public_view=true&kbns=1.html

[6] M. Iansiti and R. Levien, “Keystones and Dominators: Framing Operating and Technology Strategy in a Business Ecosystem,” Keystone Strategy, Inc., White Paper, February 2004, 83 pp. See http://www.key-inc.com/ecosystems.pdf

[7] M. Peltoniemi, “Business Ecosystem: A Conceptual Model Of An Organisation Population From The Perspectives Of Complexity And Evolution,” January 2005, 93 pp. See http://www.tut.fi/units/tuta/tita/tip/2004_reports/Peltoniemi_business_ecosystem.pdf

Posted:August 28, 2005

Psychology of Search, Harvesting and Purposeful Search

John S. Rhode’s Webword site has just published an interesting three-part series on the Psychology of Search. It may be found, with sample extracts, at:

The Psychology of Search: Chapter 1

You don't care much about the technology of search. You care about results. Search is an indication of failure, not success. If you had the answers, you wouldn't need to search.

The Psychology of Search: Chapter 2

Search is a conversation, a contract and perhaps a negotiation between two parties (man or machine). Search engines technically represent a set of basic human activities, such as information seeking, discovery, and problem solving.

The Psychology of Search: Chapter 3

The summary is that search is dominated by the human memory framework of recognition. Search engines work these days because they capitalize on our pattern matching skills and recognition abilities, no doubt about it.

There are many worthwhile observations in this series including users don’t care about the technology of search, just results; search itself represents a "failure" because the information is not known or remembered; and the search process is fundamentally about pattern matching. User comments also point to some additional fascinating reading. For these reasons, the series is well worth reading.

However, there is actually quite little in this series about the psychology of search. There is also little about the distinctiion I have written about elsewhere about the difference between casual search for facts and purposeful, directed search (or harvesting) for KM and decision-making purposes. For the latter, see my piece, Why is Standard Search Alone Inadequate to Meet Real Business Needs?

Posted:August 24, 2005

Blogging Guides: Hard to Find and Not Overly Impressive

I remember the early days (1994 or thereabouts for me, at least) of Internet search and search engines. In fact, according to a History of Search Engines, when Lycos first went public in 1994, its index had something like only 54,000 total documents. In those days, when someone posted a "how to" guide it became prominent and likely was pretty intelligent, too.

I contrast that now to a recent task I set for myself: Find the "best" listing of "how to" guides for setting up a purposeful, content-driven blog. In other words, find the best analogs to the guide I am preparing myself on my experience in entering the blogasphere (alternative spelling: blogosphere).

I can first report that the number of such items has increased greatly from the days of the early Internet — we’re now dealing in thousands or tens or thousands of postings, not simply a handful. Second, I can report most all is dross and self-serving. I guess we all know what the astrological symbol looks like representing the Age of Aquarius; I wonder what the symbols for the Age of Spam or the Age of Hype should look like?

These issues are emblematic of some broader problems. Namely, when everything is online, when everyone is a publisher, when many can figure out how to jimmy the system, how can one efficiently find and distill the best? Hmmm. This is not so easy ….

I pride myself on being a "1%"-er in terms of search and information discovery. Indeed, for many years I can proudly say my search tutorials were often deemed the best on the Web, or at least very good. Sure, I continue to learn techniques and elsewhere on this blog I frequently sum them up or re-cap them. But my experience in trying to find the definitive "how to" guides for professional, content-oriented blogs makes me feel pretty humble.

I’ve tried many of my tricks to find definitive blogging guides (with Yahoo search counts shown for each):

Obviously, the best is phrase searching, with "bloggers guide" (9,300), "blogger’s guide" (7,320), "blogging guide" (19,400), "how to" blogging (14,400,000), etc,. and many variants showing some promise, but ultimately poor yield and too many results
I have learned that it is often useful to restrict such searches by file type (esp. PDF) to cull out the most serious postings (yes, you miss some great stuff, but the premise is that taking the effort to create a PDF also signals seriousness of the content). To take our lowest count from the example above, adding the restriction of PDFs for "bloggers guide" numbers about two results. Somehow, I went from too many to too few, since my intent was to assemble a vetted list of 5-15 or so "best" guides
Even when applying these same techniques to the big results of the "how to" blogging query above limited to PDFs, the results set was still 9,340 hits. Though, again, some useful links were found, the yields were low
Another techique is to seek review or compilation sites, using those terms. There are ranking qualifiers ("top" "best" "100", etc.) that can be used for this purpose
A further technique is to search on qualifying terms that often point to guides or tutorials. Example terms are guide, tutorial, beginners, basics, 101, etc., and their plural variants
Additional narrowing of results come from using terms such as professional, business or corporate, since my interest was in more-or-less these types of blogs, and
Still another technique is to string together a few terms-of-art (read, nouns), that specifically and collectively pertain to the topic at hand. In the case of our blog topic, such terms could include blog, WordPress, blogger, trackback, ping, RSS, post, "blog roll," etc., etc.

Despite these tricks, and some others not enumerated, I was singly unable to find a "high yield" set of search results pointing me to what I wanted. Granted, each search, esp. the refined ones, surfaced some possible gems or OK results, but the general yield was poor.

Why is this?

Well, certainly, one reason is the growth of blogging. Having more blogs online means much larger numbers of postings and more difficulty in finding the gems. Another reason is that the sheer growth and popularity of blogs attracts those interested in making money. For example, Build a Better Blog System is a pretty comprehensive guide but its insights come at a price ($49). Other sites use "how to" come ons for drawing visitors into their marketing, advertising or PR services. Finally, still another reason is that some of the better guides are specific to a specific hosted service such as Blogger or specific blogging software such as WordPress or Movable Type.

Nonethless, these investigations did produce a few additional guide references:

The Executive Blogger's Guide to Building a Nest of Blogs, Wikis & RSS, an entertaining guide from Ogilvy PR Worldwide
Time to check: Are you using the right blogging tool? covers blog software comparison chart, plus pretty good glossary
How To Blog 101, a pretty comprehensive "How To" blog site
Beginners’ Guide to Corporate Blogging is fairly short and elementary
Beginner’s Guide to Business Blogging, which is a 41 slide presentation
Google’s Blogger Guide, useful for those wanting a quick blog set-up
A good practical guide that emphasizes thought and planning in launching a blog is by Stephen Downes, How to be Heard. He offers good advice on discovering why you are blogging, design and marketing and awareness conditions, etc. Stephen is the veteran of the introduction of a few blogs, and his experience shows in this short and easily read guide.

I welcome additional suggestions for worthwhile guides.

Posted:August 22, 2005

Intellectual Honesty, Attribution, Historical Revisionism, and Truth: The ‘Deep Web’ Example

Last week I came across a reference from Search Engine Watch — for which I have been a subscriber for many years and have been a speaker at their conferences — that TOTALLY FRIED me. It’s related to a topic near and dear to me, because, I am both the father and the steward. What I am speaking about is the general topic of the “deep Web.” I began a public response to that last week’s posting, but then, after cooling down, simply notified the author, Gary Price, of my attribution concerns. He graciously and subsequently amended his posting with appropriate attribution. Thanks, Gary, for proper and ethical behavior!

With some of the issues handled privately, I decided that discretion was the better part of valor and I would let the topic alone with respect to some of the other parties in the chain of lack of attribution. After all, Gary was merely reporting information from a reporter. The genesis of the issues resided elsewhere.

Then, today, I saw the issue perpetuated still further by the VC backer of Glenbrook Networks, piling onto to the previous egregious oversights. I could sit still no longer.

First, let me say, I am not going to get into the question of “invisible Web” versus “deep Web” (the latter being the term which Thane Paulsen and I coined nearly 5 years ago to reflect dynamic content not accessbile via standard search engine crawlers). Deep Web has become the term of art, much like kleenex, and if you know what the term means then the topic of this post needs no further intro.

However, I’m going to make a few points below about the misappropriation of the term ‘deep Web’ and the technology around it. I believe that some may legitimately say, “Tough luck; it is your responsibility to monitor such things, and if they did not credit or acknowledge your rights, that is your own damn fault.” Actually, I will generally agree with this sentiment.

My real point in this posting, therefore, is not my term versus your term, but the integrity of intellectual property, attribution and “truth” in the dynamic Internet. If I step back from my own circumstance and disappointment, the real implication, I believe, is that future historians will be terribly hard-pressed to discern past truths from Internet content. If we think it is difficult to extract traceable DNA from King Tut today, it will be close to impossible to discern the true genesis, progression, linkages and idea flow based on Internet digital information into the future. But I digress …

Last Week’s Posting

The genesis of this issue began with a posting on Silicon Beat by Matt Marshall, Diving deep into the web: Glenbrook Networks. Marshall is a reporter for the San Jose Mercury News. Much was made of the “deep Web” phenomenon and the fact that Glenbrook Networks now had technology to tap into it. This story was then picked up by the Search Engine Watch blog. SEW is one of the best and most authoritative sources for search engine related information on the Web. The blog author was Gary Price. The SEW blog entry cited two references on deep Web topics, both of which referenced my seminal paper as their own first references. Neither of these press articles mentioned BrightPlanet. I notified Gary Price of what I thought was an oversight of attribution, and he properly and graciously added an addendum to the original piece:

PPS: Other companies doing work in mining and providing access to the deep web include long-time player BrightPlanet and Deep Web Technologies whose technology powers the Science.gov portal.

Using this press, Jeff Clavier, one of the VCs backing the vendor, Glenbrook Networks, began flogging the press coverage on his own blog site. There were assertions made in that original piece that deserved countering, but there have been vendors that have come and gone in the past (see below) that have attempted to misappropriate this “space” and its technology and have generally fallen by the wayside or gone out of business. I chose to let the matter go quiet publicly, ground some more enamel off my teeth, and referred the matter to our general counsel for private action.

Today’s Posting

The flogging continued today under a new posting on Jeff Clavier’s site, Glenbrook Networks: Trawling the Deep Web. This new posting extended the misappropriation further, and since part of an ongoing series obviously planned to push the investment, goaded me to finally make a public response. In part, here is some of what that new post said:

The majority of web pages one can access through search engines were collected by crawling the so-called Static or Surface Web. It is a smaller portion of the Internet reportedly containing between 8 and 20 billion pages (Google vs. Yahoo index sizes). Though this number is already very large, the total number of pages available on the Web is estimated to 500 billion pages. This part of the Internet is often referred to as Deep Web, Dynamic Web, or Invisible Web. All these names reflect some of the features of this gigantic source of information – stored deep down in databases, rendered through DHTML, not accessible to standard crawlers. ….

Because the Deep Web contains a lot of factual information, it can be seen metaphorically as an ocean with a lot of fish. That is why we call the system that navigates the Deep Web a trawler.

Note that the figures used come directly out of our research, and are frequently used by others without attribution, as is the case here. However, the trawler imagery is especially egregious, since it is a direct rip-off of our original papers!. In fact, here are the two trrawler images from our original Deep Web: Surfacing Hidden Value first published in 2000, the first representing surface content retrieval:

The next image represents deep Web content retrieval:

The post then goes on to overview some “technology” with fancy names that is very straightforward, has been documented extensively before by BrightPlanet, and is covered by existing patents to our company.

Misappropriation is Nothing New

Such misappropriations have happened before. In one instance, now out of business, complete portions of BrightPlanet’s white paper were plagiarized on the home page of a competitor. We have also had competitors name themselves after the deep Web (e.g., Deep Web Technologies), appropriate the name and grab Web addresses (Quigo, with http://www.deepweb.com, now largely abandoned), government agencies make videos (the Deep Web DOE deep Web search engine), national clubs form (Deep Web Club), or competitor push products and technologies citing our findings and insights (e.g., Grokker from Groxis or Connotate), all instances without attribution or mention of BrightPlanet.

Imitation is the sincerest form of flattery and enforcement of intellectual property rights depends on the vigilance of the owner. We understand this, though small company size often means it is difficult to discover and police. Indeed, in the initial naming of the “deep Web” we wanted it to become the term of art. By not keeping it proprietary, it largely has. We have thus welcomed the growth of the concept. However, we do not welcome the blatant infringement on intellectual property and technology by competitors. We particularly expect VC-backed companies to adhere to ethical standards. I admonish Glenbrook Networks and its financial backers to provide attribution where attribution is due. This degree of misappropriation is too great. Shame, shame ….

BTW, for the record, you can see the most recent update of my and BrightPlanet’s deep Web paper and analysis at the University of Michigan’s Journal of Electronic Publishing, July 2001. Of course, there remains the definitive information on this topic in spades at BrightPlanet’s Web site.

Defense via Electrons

Actually, the real sadness here is that perhaps what is “truth” is only as good as what has been posted last. Post it last, say it loudest, and the whole world only knows what it sees. The Internet certainly poses challenges to past institutions such as peer review or professional publishing that helped to reinforce standards of truth, verification and defensibility. What standards will emerge on the Web to help affirm authoritativeness?

Certainly, one hopes that the community itself, which has shown constantly it can do so, will find and expose lies, deceit, fraud, or other crimes of the information commons. This appears to work well in the political arena, perhaps is working okay in the academic arena, but how well is it working in the general arena of ideas and intellectual property? Unfortunately, as perhaps this example shows, maybe not so great at times. The thing that I fear is that defense can only occur by how many electrons we shower onto the Internet, how broadly we broadcast them, and how frequently we do so. May the electrons be with you ….

Posted:August 19, 2005

Nath’s Comments on: Untapped Assets: The $3 Trillion Value of U.S. Enterprise Documents

Mike’s note: The following are comments submitted by Hiranya K Nath of Sam Houston State University on my earlier posted paper, "Untapped Assets: The $3 Trillion Value of U.S. Enterprise Documents." I subsequently referred to Hiranya’s and Uday M. Apte’s paper, "Size, Structure and Growth of the US Information Economy," in a follow-on to that post discussing supporting views for document assets occupying trillions of dollars in US economic activity. The following is reprinted with Hiranya’s permission.

This is an important and interesting study that attempts to measure the value of corporate 'documents' in the U.S. It not only measures the cost of creating new documents but also the cost of handling or mishandling of documents. This study measures the benefits from improved document access and use. The value of corporate documents is assessed under three major categories: internal documents, web documents (which generally reside in public domain) and 'opportunities and threats'. The first two categories provide information for internal or external use while the third category of documents is to obtain solicited grants and contracts or to satisfy regulatory requirements.

In an economy which has increasingly been information-based, the importance and challenges of managing information have reached a proportion that was never witnessed before. Quantifying the value of creating and handling documents is extremely important and, to my knowledge, this study is one of the first attempts in that direction. However, as the author admits, the estimates are compiled from various sources and, therefore, they are extremely fragmentary and may have been inconsistent. In the following paragraphs, I present my thoughts on how I would proceed if I were to conduct the study. Nevertheless, this white paper has done an excellent job in initiating a research agenda.

First, define and explain the terms and concepts. The terms and concepts used in the study need some explanations as they may be useful for a reader to have a good grasp over the issues associated with quantifying the value of documents. Some of the terms related to information economy have not yet entered the general vocabulary. The dictionary meaning of 'document' is proof or evidence in a written format. Oxford dictionary has extended the definition to include the digital format as well. Also, concepts like knowledge industry, knowledge worker, information industry, information worker need to be defined. Studies like Machlup (1962), Porat (1977) have conceptualized these terms but they have not entered mainstream research vocabulary. More generally, a more settled, well accepted vocabulary has not been developed yet.

Merriam-Webster Dictionary: Document

Function: noun

1 a archaic : PROOF, EVIDENCE b : an original or official paper relied on as the basis, proof, or support of something c : something (as a photograph or a recording) that serves as evidence or proof

2 a : a writing conveying information b : a material substance (as a coin or stone) having on it a representation of thoughts by means of some conventional mark or symbol

Function: transitive verb

1 : to furnish documentary evidence of

2 : to furnish with documents

3 a : to provide with factual or substantial support for statements made or a hypothesis proposed; especially : to equip with exact references to authoritative supporting information b (1) : to construct or produce (as a movie or novel) with authentic situations or events (2) : to portray realistically
4 : to furnish (a ship) with ship’s papers

Oxford Advanced Learner's Dictionary : Document

Function: noun
1 an official paper or book that gives information about sth, or that can be used as evidence or proof of sth: legal documents travel documents Copies of the relevant documents must be filed at court. One of the documents leaked to the press was a memorandum written by the head of the security police.
2 a computer file that contains text that has a name that identifies it: Save the document before closing.

Function: verb
1 to record the details of sth: Causes of the disease have been well documented. The results are documented in Chapter 3.
2 to prove or support sth with documents: documented evidence

Second, categorize and identify various documents. This is important because it will provide operational guideline for collecting relevant information for estimating the value of documents. From the standpoint of an organization, I think the documents can be divided into the following categories:

The first category includes traditional/conventional documents which are necessary for the operation of the organization. These documents play the role of 'intermediate inputs' in the production process. They do not directly contribute to creation of new knowledge but mostly act as store of information. There are two sub categories:
i) The first comprises documents that record operational details such as documents created by the accounting or payroll departments. Gathering of information and documentation thereof follow standard practices. With the advent of new technology the format of these documents may have changed but the standards have not changed much. I would assume that the cost of mishandling this category of documents is minimal. This category also includes documents which are created to satisfy legal requirements.

ii) The other sub category includes documents which are mainly for dissemination of information. An organization generally interacts with a target group and for optimum outcome from this interaction it is important that this target group is fully informed. Basically, these documents are created to reduce information asymmetry among agents so that problems related to asymmetric information do not arise. There is a marketing aspect to this category of documents. With the availability of new technology, constant changes in media, and people's access to diverse sources of information, this category of documents is expected to grow in volume and value. But this might cause substantial reduction in overall cost of production by reducing inefficiency that arises from information asymmetry.

The second category includes documents that directly contribute to knowledge creation. In the process of production, the firm/corporation constantly tries to invent and innovate. Invention and innovation add to the pool of existing knowledge. Documentation of newly created knowledge is crucial for the progression of human civilization. The cost of creating this type of document is expected to be relatively higher than that of other types. Since some of the documents created in this process may turn out to be useless later on, the cost of creating and recreating these documents could be enormous.

Third, develop a methodology to measure the value of the documents. The first category should not be too hard to measure. Since every organization has well-defined departments responsible for creating and handling this category of documents, the information should be relatively easily available. I would anticipate some formidable problems in measuring the value of the second category. These documents may be created without specific planning or without following standard practices. Also, measuring the value of large amount of 'unnecessary' documents will be challenging yet important for overall value of the documents

Among other issues, since most documents are created and used at the intermediate level, a cost-based valuation will be appropriate. But some documents could be priced and if price-based valuation is used for those documents then appropriate adjustments should be made to make them consistent with each other.

References:
Machlup, F. (1962), The Production and Distribution of Knowledge in the United States, (Princeton University Press, Princeton, NJ).

Porat, Marc U and Rubin, Michael R. (1977), The Information Economy (9 volumes), Office of Telecommunications Special Publication 77-12 (US Department of Commerce, Washington D.C.)

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Month: August 2005