Buying Knowledge: Effective Acquisition of External Knowledge

Citation

Hannabuss, S. (2005), "Buying Knowledge: Effective Acquisition of External Knowledge", Journal of Documentation, Vol. 61 No. 6, pp. 807-809. https://doi.org/10.1108/00220410510632112

Whether to buy knowledge comes before how to do it. It is in principle the same question as whether to outsource. Buying in resource and expertise means that you enhance your own expertise and competitive position. But collaboration entails disclosure, and that entails risk. This is why getting the procurement process – especially the knowledge procurement process – right is critical. Usually knowledge transfer runs in parallel with technology transfer, and often in scientific and technological areas of R&D. Knowledge creation, management, and diffusion are central elements of economic advantage, corporate and national, symptoms of economic health, and major vehicles of value‐added and change management.

 These are the arguments in Peter Sammons's new book, Buying Knowledge. He comes from a procurement background in leading‐edge technology and financial services, and in this book provides useful advice, backed by a series of useable checklists, on knowledge procurement. Time and time again he cross‐references his other book, The Outsourcing R&D Toolkit (Sammons, 2000), and anyone wanting Buying Knowledge is likely to buy both.

So who is Buying Knowledge for and how does it acquit itself? It is mainly for the knowledge manager (not always the information or library manager) directly or soon to be involved in procurement and contracting activities with knowledge providers or suppliers. Such a manager will be familiar with the need to carry out an audit of the existing knowledge base of the company or organization, but perhaps needing the guidance and reassurance of a checklist – from identifying requirements (perhaps to comply with due diligence) to invitation to tender/negotiation to contract, project and risk management.

Such a manager, too, will be familiar, broadly, with the knowledge transfer process, but again need the reassurance of detailed guidelines – the transfer of knowledge and skills, what to disclose and share with providers at the pre‐contract and post‐contract stages, what existing know‐how can be built upon and what new knowledge should be targeted, what metrics to use, milestones to set, and deliverables to identify.

Embedding knowledge transfer is never easy, crucial though it is for the innovation and intelligence needed for competitive advantage and even survival. Sammons makes it clear that this is now a global business, where buying‐in might take the form of buying up (as in mergers and acquisitions), where government policy and corporate strategy towards R&D is a key driver, where consultants rarely want to advise when they can also manage development, and where universities (“knowledge factories”) are as interested in exploiting intellectual property rights (IPR) as you are.

Contracts and IPR rightly shape much of the discussion; for all that, the burden of the book is that of procurement advice. The intellectual capital and “intangible” assets of a company or organization – its patents and trademarks, copyrights and licences – may contribute most if not all the bottom line. The knowledge you create needs protection, in forms like patents and copyrights, so that you have exclusive exploitation rights over a period, above all (and probably despite) the plurality of jurisdictions in the internet age. IPR play a key role in knowledge creation, knowledge transfer, and buying knowledge. It might be what your employees know, whether your consultant's know‐how is his or yours, who owns what early on when you are setting up the arrangement, and who is responsible for what downriver when unexpected costs and benefits emerge.

Sammons is right to point out how areas of IPR like patents are changing (like a wider range of challenges, political pressures over developing countries and extending patents to plants and cloned material). It is natural for owners to want to protect knowledge but, pushed to extremes, diffusion encourages innovation, and key monopolies can inhibit and even control the public domain in ideas. Tensions over IPR carry through into contracts and Sammons is wise to alert readers to the background and foreground rights that might appear in contracts, to pre‐existing rights and building in exploitation rights into contracts, and to issues of confidentiality and disclosure and liability likely to affect outcomes. Buying in knowledge could mean competitive tendering, where disclosure on either side needs protection and Machiavellian skills. Security and risk management, and teasing out collaboration in project management, are all relevant practical considerations. Reference is made to several good sources of model contracts.

Varying degrees of integration, successful and otherwise, follow from such contractual liaisons. Structurally, perhaps the most obvious form is where a commissioning company takes on contract research. Consultants and universities present more risks, from scope‐creep (where the contract takes on new and unexpected features) to incompatible timeframes and staff turnover. Sammons regularly advocates taking steps to achieve clarity and understanding at the start and throughout the process, above all because the knowledge transfer process is so complex and expensive. Increasingly, too, knowledge managers have taken on procurement roles, traditionally a field where contracts (rights, licences, disclosure, indemnity, termination) play a central part. It is also, increasingly, an issue of financial management as projects are planned and costed and reviewed, costs are tracked, fixed‐stage payments made, and contingencies handled. E‐procurement (not examined here, but noted) is the way things are going.

This is a timely, practical book. It keeps its eye on the ball, and weaves knowledge management and intellectual property, contractual and confidence issues together in a pragmatic way, not indulging in too much extraneous on any one. Its checklists will be good for evaluation and provide a framework for thinking through – probably in advance – what you want out of a collaboration and a contract. Sammons's other book, on outsourcing, contains specimen letters and drafts for such things.

Buying Knowledge is thin on worked‐through examples, and this is a real disappointment (though no surprise given the secrecy in the technology transfer area), yet time and time again his discussion would improve from examples, even plausible scenarios, of how things roll out. Westreco (a US case from 1992) is a rare contract research taxation case (p. 49), while Microsoft is scarcely typical and in any event a mergers and acquisitions case (p. 127). It would be good, too, to see what Sammons says about ROI (return on investment) and the profit‐and‐loss account, appendix information on billing, and the theory on intellectual capital all brought together in a coherent exemplar showing the financial implications of buying knowledge.

All that said, this is a useful book for the knowledge manager moving into procurement and the procurement manager moving into intellectual asset management, and also for students and lecturers where such things are taught.