INDEX.

1. The Knowledge Organisation.
2. The Market Value.
3. The Personnel.
4. Corporate Knowhow.
5. Corporate Image.
6. Investing in Intangible Assets.
7. Attract the Customer.
8. Attract the Personnel.
9. Develop the Competence of the Personnel.
10. Utilising Capacity.
11. Matching Capacity and Demand.
    11.1. The Vicious Circle.
12. Managing the Strategic Dilemma.
13. Customer Strategies.
14. Personnel Strategies.
15. Pricing.
16. Some Critical Incidents.
17. Management Information.

6. Investing in Intangible Assets.

All investments involve a transfer of liquid funds (cash) into less liquid funds.

When a Knowledge Organisation acquires tangible assets like a machine, the cash is used and the corresponding value is shown as an "asset" in the balance sheet. In accountancy terms, there has been a negative cash flow but neither profit nor loss in the Profit & Loss Account.

When a Knowledge Organisation invests in intangible assets like Knowhow, accountants in many countries do not allow the company to bring the value into the balance sheet. The investment therefore is corresponded by an "invisible" equity. The investment shows as both a negative cash flow and a loss in the Profit & Loss Account.

Both kinds of investment have the same effect: they sacrifice short term profitability for long term (higher) profitability. But the difference in accounting practice confuses the management information. Knowledge Organisations' investments are mostly in intangible assets. They can be done by sacrifices like:

1. Cash outlays (which increase costs for interest).
2. Give up capacity that would otherwise bring revenue. I.e. allow the Personnel to work with internal R&D rather than customers or accept assignments that bring knowhow but little revenue.
3. Pay "more than necessary" for solving the customer's problems. I.e. use an "over experienced" personnel or be careful with how to man the teams.

In the simulation model all three kinds of sacrifices are shown. Investment in Knowhow is a combination of (1) and (2) above. Investment in Corporate Image is an example of (3).

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