December 20, 1998

from the Friends-of-the-Revolution dept

Information Dividend?

By Brian Day - December, 1998

set-up
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My limited understanding of a CFO's job is to take the money that is left over at the end of the day and figure out where to invest it. 

The highest return may be in an internal R&D project, a cost saving measure, some foreign derivatives, etc.  But if the expected return on these investments is lower than the expected return the shareholders could make on their own it is the CFO's duty to distribute the funds to the stockholders as a dividend.
 
Money is a piece of paper with a value associated with it.  If neglected money eventually becomes useless (through inflation or whatever).

the point
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Is the CIO's job the same but with information?  After you have sucked in, processed, and spit-out knowledge capital should the CIO determine how that information should best be used?  Information is a virtual assets that has a value.  The value of the information usually decays very rapidly (why Yahoo! gives out 15minute delayed stock quotes).  Should it be considered responsible business behavior to create knowledge capital and then do nothing with it?  Wouldn't it be better to give it away if you aren't going to use it?  Maybe to stockholders?

What would happen to the stock market if companies started giving out information dividends?  First of all I suspect that R&D powerhouses like Xerox (is this still true?) would receive a boost in stock price. Companies that were interested in Xerox's research would invest in the company (good).  Since companies like Xerox would not like to give away all their research to other companies like Microsoft, they would try harder to use the information internally so that they would not have to claim an information dividend (good).

 conclusion
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What we are doing today with knowledge management is equivalent to setting up the accounting rules we have set up to manage a corporations finances.  We don't know how to manage or measure knowledge.  If we could, I suspect that the forces of capitalism would serve us well (as described above) to push for information responsibleness within  companies.

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Friends of the Revolution
by Brian Day

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