Managing Change through Learning - Essay Example

Managing Change through Learning Introduction can be directly evaluated Dixon (1998) had rightly used the quote “The only way to cope with a changingworld is to keep learning.” This quote is valid even in today`s context where due to advancement in technological areas and management techniques the organizational world is constantly changing. The organizations have to cope up with these new developments and keep up to date with the changes happening in the world otherwise they will be left behind and ultimately perish. There have been examples in the future where organizations did not change with the time and ultimately had to die a slow death (Chrisman, Chua and Sharma, 2005). This paper has tried to capture the main aspects of organizational learning which are essential for the growth of an organization. The organizational learning is directly correlated to the growth and development of the intellectual and social capital of the organization, which are generally referred to as the wealth of any organization (Alavi and Leidner, 2001). There are many ways of improvement and growth of social and intellectual capital of an organization. Some of the ways explored in this paper are communities of practice and soft system thinking. The communities of practice have a direct relation with development of social capital of an organization. The soft thinking methodology is generally applied by organizations to develop the intellectual capital with the organization. The main objective of the paper is to emphasise the importance of learning the changes in the current scenario for organizational growth. The paper also aims to throw some light on the concepts that can lead to improvement in organizational learning like improving intellectual and social capital (Wong, 2005). Main Discussion Learning in an organization is directly proportional to the growth and development of intellectual and social capital of the organization. The most important aspects of improvement in intellectual capital of an organization are through soft system thinking (Yeo, 2002). The systems thinking is one the components described in the learning organization theory. The concept of soft systems thinking is the key which holds all the other concepts of the learning organization together. The soft systems thinking framework is a conceptual set of knowledge and tools which have been developed in the course of over 50 years. The origin of soft system thinking lies in the field of systems dynamics where it is used to make patterns clearer and also helps to change them effectively (Gao, Li and Nakamori, 2002). The system in the soft system refers to things that shape the behaviour pattern of the employees of organization, business prospects or human endeavors. Since the organizations and their employees are part of change pattern, it is difficult for them to see the whole picture of the change. Instead, organizations tend to focus on snapshots of parts of the system and wonder the reason for not finding out the solutions to their problems. The systems thinking is not applicable to all the political, economic, societal, technological, legal and business problems but it gives a direction to find out the real problem existing in the organization and getting a better understanding of the current position with respect to the team or the whole organization (Choo and Bontis, 2002). The soft system thinking approach has not only the ability to enable organizations understand the current reality but also help them understand the ways the organizations can make long lasting beneficial change in the system (Ulrich, 2003). This can be termed as high leveraged interventions in the organizational functioning. The organizations must understand the system first before they can design a targeted intervention to make the required changes in the system. In organizations, many a times there is a strange problem that the organizations do not know what the problem is. A problem is defined as the gap between the expectations from the product or service produced by the organization and the actual experience of the products or services of the customers (Barney and Clark, 2007). However, many problems have many types of solutions which when applied to the problems that do not improve or solve the situation but often make the original problem worse or lead to cropping up of new problems. The Systems thinking gives a procedure for teams and individuals of the organizations to understand changes which will provide long-term improvements and not quick fix solutions (Priem and Butler, 2001). These quick fix solutions eventually fail but are applied again and again. The soft system thinking helps both teams and individuals within organizations fully understand the type of the problem. It does not apply quick-fix solutions; it evaluates the areas that are required to be changed and then make effective changes in structures and systems to rectify the problem and make the processes correct so that they function properly (McKay and Marshall, 2001). Intellectual and social capital creation Intellectual capital Intellectual capital refers to the knowledge which firms possess. It can be in the form of employee knowledge, technical know-how, business information and any other form of information that provides competitive advantages for a firm (Stewart, 2010). Intellectual capital be described as an asset. It is essentially a collection of information which is available to a firm and is used by the same for deriving profits, get new customers and to develop new products. Human capital and structural capital are the two important types of intellectual capital. Human capital includes the expertise possessed by employees. This includes employee and managerial knowledge, skills and technological expertise. Structural capital is largely available in the form of databases and the organizational structure and processes (Choo and Bontis, 2002). Without intellectual capital organizational processes cannot function. It is the intellectual ability existing in an organization which directs the business processes and controls them so the set targets of the business can be achieved. With the help of intellectual capital it becomes possible for organizations to develop plans and strategies that steers the business in a suitable direction. Intellectual capital is recognized as a true expense of the firm as it helps in reaping profits (Wall, Kirk and Martin, 2003). It can be measured as the cost of hiring employees, acquiring technical skills, training employees and the expenses incurred for increasing the life span of intellectual property. Customer capital also forms an integral part of the intellectual capital as it helps in maintaining the market size by successfully retaining valuable customers. Customer capital includes expenses such as advertisements and other promotional expenses incurred by a firm so that the customer base of an organization remains strong (Crawford and Pollack, 2004). Intellectual capital at Skandia Skandia began to concentrate upon its intellectual capital development because the company had realised that such a capital is important for long term sustenance. The primary mission of Skandia in respect of intellectual property development was to enhance the measurability and the visibility of intangible assets existing in the organization, to develop and capture knowledge transparency and technologies, enhance the commercial transfers of intellectual capital and to add value to the same over time through training (Karier, 2010). The firm identifies intellectual capital management as a process for increasing the interaction level between the human and structural capital. It has been seen that when the interaction between these two aspects increase then the net intellectual capital also positively gets build up. The firm gives much importance to aspects such as leadership, development of communication and cultivation of group work. Skandia has made a valuable observation that when the physical assets are provided with the right number amount of intellectual capital they automatically perform in a better way. For instance an individual who knows how to drive a car understands the utilities and the functions of a car much more effectively than a person who does not possess the skill of driving, although he may be having a car. Availability of good infrastructure will not be of much use to an organization if it does not utilise them effectively. Effective utilisation of different resources is only possible if an organization possess the right amount of talent and skills. Organizations which are highly successful are seen to concentrate and value their human resources. Human capital strengthens firm’s technical abilities. When the right employee possessing the right number of skills and expertise is assigned to do a job which suits him the most, it results in better performance. Without intellectual capital a firm cannot make good use of its tangible capital. Skandia develops its intellectual capital through seven important phases which are; missionary, measurement, leadership, technology, capitalizing and futurizing (Roberts, 2006). To become a real learning organization, an in depth understanding of the technique of systems thinking is required. In nut shell, system thinking provides a way for managers to handle complexity. It is a system to help organizations understand the relationships between data, information and people. It improves and enlarges individual and collective thinking skills and helps improve individual and collective decision making skills through putting substantial amount of focus and attention of organizations on the factors that cause performance problems and the improvements in systems that will bring about the required results (Hitt, Ireland and Hoskisson, 2012). System thinking has helped organization improve and retain their intellectual capital through understanding the problems that affect the proper utilization of intellectual capital and solving them so that intellectual capital can be used to improve results (Crawford and Pollack, 2004). It is also a system through which the way of looking at the whole process is encouraged, rather than looking at pieces and fragments. People are the main reason for development of any organization and form the organizations` social capital. The network of individuals working in any organization form a critical part to develop the social capital of organizations, but the interpersonal dynamics among individuals within the organization is equally important (Ichijo, K., 2006). This relational aspect addresses issues related to trust, values and norms, expectations, obligations and identification which are critical to develop the social capital in an organization. This relational aspect suggests that social capital is fostered and developed through individuals believing that their deeds will be reciprocated which will meet the expected obligations. The increment in social capital improves the knowledge sharing and value of products and services of the organization through solving critical problems and improving qualities. For example, Walmart offers customers innovative services which focus on their needs and also offer employees an atmosphere of continuous learning leading to productivity improvements. Social Capital management for Walmart involves developing a creative and innovative work environment which helps employees learn from each other by sharing knowledge (Walmart, 2014). The organisation also accesses knowledge and information from different sources and shares it for collective welfare of the organization as well as the employees. The social capital affects the core policies, standard protocols and processes of the organisation to add value to each process performed in the company. The result of such initiatives at Walmart has been the inculcation of core operating principles which deliver the best results at all levels using world class techniques and processes (Walmart, 2014). Communities of practice help organizations build their social capital through different dimensions discussed in the following paragraph. Communities of practice help individuals in organizations to develop a network of people within an organization who have similar interests (Ardichvili, Page and Wentling, 2003). This is beneficial for developing the social capital in organizations through many ways. First, the network serves as an intra-organization clearinghouse through identification of individuals or group of individuals with relevant knowledge. This helps individuals within the community to make connections (Gulati, 2007). In general it can be stated that social capital plays a vital role in developing the information base of an organization. Moreover with the development of better technologies and the world becoming a global village it has become easy for one society to interact with the other freely and easily. Thus the social network becomes widespread. In the organizational perspective social capital plays an important role in developing goodwill and enhancing the organizational value (Roberts, 2006). Globalised business environment has further triggered the need for enhancing social communication and network as they help in spreading and acquiring valuable information. In a globalised business environment it becomes essential for business organizations to interact across borders. In a globalised social network different people from different cultures interact and exchange of information and resources takes place. Having a widespread network is essential for organizations as it helps to enhance business on a global scale (Winter, 2003). In a social network when individuals interact, they share there experiences and preferences in respect of different products and services. This paves way for organizations to gain popularity through word of mouth. This helps in promoting different products and services effectively (Johnson, 2001). One of the significant features of social network is that it brings people together and thereby helps in creating a suitable environment for sharing knowledge. Social network also plays a significant role in the exchange and passing down of age old ideologies and thinking (Hult, Ketchen and Arrfelt, 2007). Knowledge Management Knowledge management can be described as the process of effectively capturing, distributing and using knowledge in a manner so that organizational resources are utilized in the most optimum way for yielding maximum results. It simply means to use organizational information’s in the most holistic manner. Different organizations have their own structural processes by way of which knowledge is managed (Hill and Jones, 2008). An integral part of knowledge management is the fast and timely flow of information from department or point to another. Organizational success hugely relies upon the aspect of being able to transfer information aptly. Knowledge management also involves the collection of information in the right manner and from the correct sources. Managing information databases also becomes extremely important in this context (Wasko and Faraj, 2005). Knowledge in general can be effectively categorized into three different types; explicit, implicit and tactic. Explicit knowledge refers to the information which is available in the tangible form. Implicit knowledge includes that type of information which is not available in the tangible form but is possible to be converted into the explicit form. Tactic information consists of complicated data which requires proper interpretation o that it can be converted into the tangible form (Chrisman, Chua and Sharma, 2005). SECI model by Nonaka and Takeuchi In the SECI model the tactic and explicit knowledge types consistently interact with each other. The interaction subsequently helps in the generation of new type of information. The main idea behind the SECI model theory is that when information is shared and processed it leads to the generation of new types of information. The aspects relating to the model are discussed as follows (Ireland, Hitt and Sexton, 2001). Socialization This includes the system of sharing knowledge through face to face interaction. Many at times information gets disseminated by way of socialization and sharing of experiences. This is a highly unstructured manner of information gathering or distribution. Externalization This process involves the conversion of tactic knowledge into explicit. Various models and concepts are used in order to convert information from one form to another (Winter, 2003). The conversion is mainly done so that it can be easily understood by the users of the information. By way of such conversion it is also possible to develop new type of knowledge and ideas. Combination This process involves combining the explicit knowledge with other types of information and concepts. This phase also involves the proper analysis and organization of knowledge. It is essential that the information which has been collected gets converted effectively into other forms. Internalization This phase involves understanding the knowledge and interpreting the same so that adequate actions can be taken. Once the information has been well understood it is then disseminated socially. In this manner the cycle continues and the first level of the model is reached back (Lee and Choi, 2003). Knowledge gets created and distributed in a continuous manner. The above discussed four aspects of the SECI model operate in a faster and in a wider manner as the organizational hierarchy goes up. However not all organizations can adapt themselves with the SECI model. It has been observed that this model of knowledge management is primarily existent in the Japanese organization. The SECI model of knowledge management also requires the existence of adequate levels of trust in the sources of information. For information to be freely distributed and interpreted it is essential that it has been obtained from a highly reliable source (Roberts, 2006). Knowledge management is all about providing the right information to an individual at the time when he or she requires the knowledge the most. This process may not seem a difficult task to do but this strategy has a strong implication on the corporate strategy of any company through a number of critically important tasks. The organization has to first understand the already existing forms knowledge which exists within the organization. It has to create processes which cover all of the organizational functions, and ensure that the initiatives taken by the organization are supported and accepted by members of the organization (Alavi and Leidner, 2001). Knowledge management includes creating new knowledge or intellectual capital; it mainly focuses on sharing of knowledge, knowledge storage and knowledge refinement. It is very important to understand the knowledge management techniques as it is not only about the management of knowledge for learning only but the overall aim of knowledge management is to improve the value and refine the competences and knowledge base of the firm so that the organization can meet the pre decided organizational targets. The implementation of knowledge management has many dimensions (Gold, Malhotra and Segars, 2001). One of them is the knowledge management strategy creation. The knowledge management strategy is dependent on corporate strategy. The objective of knowledge management is to share, create and manage knowledge assets which will help the organization meet its tactical and strategic goals. The organizational culture also plays an important part in determining the knowledge management strategy of a firm. Knowledge management influences the interaction of people, the context of knowledge creation, the resistance of people towards change management and ultimately the sharing of knowledge with co-workers (Wong, 2005). The organizational processes influence the creation and sharing of knowledge. With the implementation of the right processes and systems knowledge management can be effectively and efficiently implemented in organizations. Knowledge management has a strong correlation with management and leadership. It requires the constant guidance and improvement from experienced and competent leadership. There are many types of knowledge management roles which an organization can implement. These include a chief knowledge officer, knowledge managers and so on. Knowledge management is heavily dependent on technology. The systems and tools which are used for sharing and creation of knowledge in geographically distributed organization is designed and implemented with the help of technology (Sanchez and Mahoney, 2002). Another important aspect of knowledge management is politics which has many long-term activities that supports, implements and sustains knowledge management initiatives that involve all organizational functions. These initiatives are very expensive to implement and most often have no direct return on investment which may be clearly visible to the top management (Yeo, 2002). Figure 1 (Source: John Biggam, 2002) The SSM methodology is based on Checkland idea is generally used to remove any barriers in knowledge sharing through the soft system thinking concept. For example, the British Airways knowledge management program enables the creation, distribution and use innovations and knowledge that enhances the customer service and promotes the experience sharing which helps new and existing employees learn from collective wisdom (British Airways, 2010). This enables development and implementation of knowledge management programs and also connects members of communities of practice to encourage further innovation. The vision of the British Airways is "The culture and tools are in place to make the appropriate sharing of knowledge the norm in British Airways. The knowledge management vision within the firm is to enable professionals to acquire knowledge and synthesize data faster and easier" (British Airways, 2010) British Airways aspires to become an organization with a knowledge management program that is capable of capturing and sharing the best in class work practices (Lee and Choi, 2003). Conclusion Thus through this study it can be established that the intellectual capital and social capital are highly interrelated. The development of both these capitals is essential for the growth and development of the firm. Soft systems thinking is foremost essential for the development of intellectual capital. The community of practice helps in proper formation of networks of professionals so that everyone can learn from each other (Choo and Bontis, 2002). This helps to create new knowledge and also augments learning in an organization. The development of social capital is thus enhanced which also positively affects the increase in intellectual capital of the organization. The existing and new knowledge developed in the organization should be properly managed through a knowledge management program which not only makes the knowledge available to all members of the organization but also helps in creating more innovation based on existing knowledge base (Priem and Butler, 2001). 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