Strategy and Management of Change The Knowledge Economy and Competitiveness and Strategic Management Professor Julian Lowe School of Business
Focus questions • What is knowledge? What is information? • What is the knowledge economy and where is it going? • How does knowledge influence the development of competitive advantage? • How can knowledge management be embedded in strategy? • What is a learning organisation? Is it consistent with the evolution of the modern organisation
Questions for class discussion • Identify types of knowledge in your organisation. How is it managed - Group? Individual? How can it be managed better? • What role does knowledge play in strategy ? • What is the knowledge economy and what impact will it have on the management of strategy and organisation?
Mckinsey case • How did Mckinsey manage knowledge over the period of the case? • What role did knowledge management play in strategy? • Is their industry special? What are the lessons for other companies in other industries?
The New Economy? Living standards Toffler: Waves of economic change Information wave Industrial wave Agricultural wave Time
The Learning Organisation • Organisations that ‘experiment more, encourage more and tries and permit more failures; they interact with customers more; they maintain a rich information environment heavily laden with information.’ (Tom Peters and Robert Waterman in ‘In Search of Excellence’) • An organisation ‘skilled at creating, acquiring and transferring knowledge and at modifying its behaviour to reflect new knowledge and insights.’ (David Garvin in Harvard Business Review) • ../con’t • (Source: Economist Intelligence Unit, n.d., p.4)
The Learning Organisation (con’t) • Popular definitions of a learning organisation… offer abstract prescriptions for successful management in the knowledge-based economy: • An organisation which ‘people continually expand their capacity to create the results they truly desire, where new and expansive patterns are nurtured, where collective aspiration is set free and where people are continually learning how to learn together.’ (Peter Senge in ‘The Fifth Discipline’) • .
But?? • The 21st century organisation • Economist audio
Wealth from knowledge Company value seen to be dependent on intangible assets, knowledge assets, intellectual capital and intellectual property Human resources People are seen to own knowledge, create value, and retain organizational memory. And they can leave Knowledge interdependence Cross-boundary interdependence between organisations: customers, suppliers, partners, etc. Knowledge Management Organizational learning Pace of change requires continuous regeneration of organisational knowledge base Technology Limits of information systems, information management. Potentials of work wide web, knowledge technologies? Innovation Advantage through innovation, knowledge creating, knowledge sharing and application
Terminology • data • information • knowledge • all the rest • wisdom • insight • entovation
Information & Knowledge Knowledge with insight Wisdom Knowledge Information Data Information with meaning Data with context Facts, observations, data points
Data • a set of discrete objective facts about events • in an organisational sense most usefully described as a structured record of transactions (Davenport and Prusak 1998) • cost, speed and capacity
Information • data endowed with relevance and purpose (Drucker) • a message with a sender and a receiver • data becomes information when its creator adds meaning
Knowledge • justified true belief (Nonaka and Takeuchi 1996) • knowledge is a fluid mix of framed experience, values, contextual information and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organisations, it often becomes embedded not only in documents and repositories but also in organisational routines, processes, practices and norms.(Davenport and Prusak 1998) • Tacit and explicit knowledge
Distinctions between knowledge management and information management Managing knowledge Information Management Emphasizes adding value to content by filtering, synthesizing, interpreting, adding context Focus on culture/work practices Requires on-going human inputs whose variability precludes automating the capture process Emphasizes delivery and accessibility Heavy technology focus Tends to assume that information capture can be standardized and automated
Spender’s Taxonomy Individual Social Conscious Objectified Explicit Automatic Collective Tacit J C Spender 1996
as an asset sustainable appropriable protectable/imitable role in innovation architecture of relations leveraging other asset equipment/technology etc in systems as an integrator part of the culture organisational routines alliances capabilities rigidities and path dependencies Is knowledge strategic
Five things you can do with Knowledge Generate it Identify It Facilitate/Enable It Codify/Represent It Transfer/Socialize It
Four Major Categories of Knowledge Projects • Making Knowledge Visible • Creating Knowledge Intensity • Building Knowledge Infrastructure • Developing Knowledge Culture
Problem solving Importing Knowledge Core Capabilities Implementing & Integrating Experimenting Knowledge Creating and Diffusing Activities - Mini Steel Mills Knowledge and creation of core competencies D Leonard-Barton
Managing knowledge strategically • Organisation and coordination issues – structure, systems, culture • Competitive advantage issues – creation, protectability, transfer, longevity • Future changes – diffusion of e-business; nature of the intellectual property system; convergence of cultures and norms and absorptive capacity