Strategic Knowledge Management - Literature review Example

Strategic Knowledge Management Introduction In this era of rapid transformations in technology and business operations, it has become important for organizations to upgrade their knowledge and skills to remain competitive in the ever-changing business environment (Blackmore, 2010). Knowledge management is the system of capturing, sharing, infusing, and effectively implementing the acquired knowledge within the organization and through its internal stakeholders for the purpose of achieving the organization’s strategic business objective. This is the latest management concept that has gained considerable attention in order to enhance organizational dynamism (Grant, 2012). The system aids constructive interaction among different entities of the organization, obtaining input from every possible source of the business environment. Another important concept that has also achieved significant recognition in the contemporary business world is intellectual and social capital. Intellectual capital can be explained as the aggregate value of the people associated with the organization, the value of those aspects that carry a long-term relationship with the company, such as suppliers and distributors, and the value of the structural capital. Social capital specifies the value of social associations and networking, which is dependent on the “norms of reciprocity” (Wang, Liu and Mingers, 2015 p. 253). Furthermore, social capital gives rise to communities of practice, where people with common interests in a specific organizational domain create a group to enhance their knowledge on that particular area through the process of sharing and internalizing (Kimble, Hildreth and Bourdon, 2008). Another related concept is the relevance of soft systems thinking for the purpose of solving critical organizational problems. Therefore, business organizations strive to align their activities with the changing world by enhancing their knowledge through effective and relevant learning (Flood and Romm, 2007). In this paper, the importance of the knowledge system and learning will be critically analysed from the perspective of contemporary business organizations. Discussion “The only way to cope with a changing world is to keep learning” (Dixon, 1998, p. 31). Business organizations are subject to a large number of internal and external forces that influence them to deviate from their dynamic equilibrium state. For instance, dominant stakeholders such as suppliers and customers tend to create huge pressure on the demand side of the organization (Christensen, 2003). Therefore, the organization’s internal entities aim to address all such demands and to satisfy organizational objectives through incorporating constant learning and knowledge acquisition. Such practices help the organization modify its whole business operations according to the contemporary industry practices and the demands from external factors (Smith and Lyles, 2011). In fact, organizational learning aids the organization in solving the critical problems encountered in its daily operational activities. In the next segment, all such factors that facilitate and enhance organizational learning will be discussed in detail. Knowledge Management Knowledge management is a broad aspect of system management that includes information and functions from different industry segments. According to Wallace (2007), it is an intangible resource organizations reinforce to maintain their competitive position in their respective industries. Such incorporation of knowledge management also tends to sharpen the intelligence and expertise within the organizational systems. Eminent behavioural scientist Awad (2007) believes that as knowledge management enriches the employees of the organization with the latest innovations and ideas, the system fosters creativity, which in turn enhances the organization’s productivity. Therefore, the effectiveness of knowledge management is reflected directly in the reduction of the project’s completion time, in improved productivity, and in the inclusion of technological and operational innovation in the business process (Christensen, 2003). King (2009) has shown contemporary business organizations benefit in a number of ways from adopting knowledge management. According to King (2009), the knowledge management system tends to examine the strategic objective of that particular organization and procure knowledge purposeful for the organization only. Such knowledge management enables the organization to achieve its business objective within the stipulated time. Furthermore, as knowledge is mutable, knowledge management places significant emphasis on revising and updating the existing knowledge practices, on eliminating the obsolete knowledge, and on incorporating the latest strategies and associated knowledge (Awad, 2007). According to Hislop (2013), knowledge management influences alliances and the exchange of ideas among all the internal and external stakeholders associated with the organization. The process helps the organization to keep its systems updated with the latest industry practices, innovations, and policy changes in the economic and socio-political environment. Such an amalgamation of stakeholders and the ideas related to recent trends helps organizations enhance their competitiveness in their respective industry segments. King (2009) has identified knowledge management as visionary, as the system aids the organization to incorporate the latest technology and practices so the organization can strive to achieve its future goals in a more efficient way. In fact, knowledge management is complementary to the organizational learning process and initiatives such as total quality management, providing complete knowledge and information regarding ongoing and future projects (Galliers and Leidner, 2014). Grant’s (2012) recent studies have identified that an organization experiences two distinct knowledge bases: explicit and tactic knowledge. Explicit knowledge indicates the existence and application of traditional, theoretical knowledge in the organizational framework. Exercising such knowledge is mainly observed among the junior to middle managers, whereas the top management and corporate-level officers prioritise discussion and the application of tactical knowledge. Barnes (2002) signifies the importance of tactical knowledge by emphasising all individuals within organizations are already preoccupied with tactical knowledge, which is the capability of the employee to make efficient use of such knowledge in their organizational activities and, when needed, in the decision-making process. Tactical knowledge also determines the employees’ inclination towards achieving organizational objectives within the predetermined time period, their level of contribution, and their initiative to exercise innovative practices within the organizational framework. However, Grant (2012) has found employees are not always motivated to utilise tactical knowledge to the fullest due to the influence of various organizational pressures. In fact, many employees are unaware of their tactical knowledge and that they can use it to enhance their productivity. Therefore, knowledge management plays a crucial role in sharpening the employees’ tactical knowledge so they can be self-motivated with a stronger commitment towards specific organizational goals and an enhanced interest in the utilization of technologies and innovation (Galliers and Leidner, 2014). From Christensen’s (2003) perspective, in most organizations, the level of tactical knowledge is finite among the employees. Hence, if the management does not create any provision for enhancing the knowledge of the employees, tactical knowledge becomes redundant because of excessive utilization, and, eventually, the employees tend to leave the organization due to their inability to perform well. Therefore, such an organizational situation clearly signifies the importance of a knowledge management system within the organizational framework (Awad, 2007). Knowledge management aims to increase the overall knowledge base of employees, and its application results in organizations experiencing a significant increase in overall performance that facilitates gaining a competitive advantage in the concerned market. However, Rothwell, Stavros, Sullivan, and Sullivan (2009) were of the opinion that, while prioritizing on tactical knowledge, organizations should not forgo the relevance of explicit knowledge, as the total business environment is operating on this fundamental knowledge. Therefore, while incorporating a knowledge management system and implementing tactical knowledge, organizations are also required to infuse explicit knowledge to strengthen their organizational foundations and to improve the knowledge and skills the employees possess so they become more efficient and demonstrate their expertise in performing complex duties and solving critical organizational problems (Schiavone, 2014). However, in spite of the many positive aspects of this strategic initiative, Smith and Lyles (2011) believe the implementation of knowledge management often requires the organization to involve a third party or a software intervention, as the security of the organization remains in question because the company is bound to share its sensitive information with its experts in the knowledge management field. This restricts many organizations from adopting the system. Galliers and Leidner (2014) have rightly identified that implementation of the new cultural environment through overlapping the existing practices also posed a huge challenge to the knowledge management system. Furthermore, technologies have become so disruptive these days that it becomes difficult, as well as expensive, for knowledge management to let the company cope with the technological changes. As knowledge is difficult to quantify, the effectiveness of applying knowledge management is seldom clear to the organization’s leadership. As a result, managers have been noticed to be reluctant regarding its implementation process. However, in spite of all these drawbacks in terms of its implementation, knowledge management’s contributions in enhancing organizational efficiency and competencies are indisputable. International institutions such as World Bank have dramatically transformed their management processes (Schiavone, 2014). In World Bank’s case, the transformation is evident in the shift of the organization’s emphasis from a hierarchical source of low-interest loans to a decentralized organization through the extensive use of knowledge management. Including such systems has helped the organization to fight poverty and disease in developing and underdeveloped countries (Jackson, 2013). Intellectual Capital & Social Capital Intellectual and social capital hold immense importance in the contemporary business organization, as these two attributes help the organization capitalize on the gained knowledge from the knowledge management system, enhancing the value of the organization itself. According to Bounfour and Edvinsson (2012), intellectual capital can be comprehended as an aggregate value of three aspects: the human capital that influences the organization to understand the value of its human resource, the direct contributions of which are responsible for the revenue earned by the company; the relational capital that indicates the value of the inherent relationship with the customers, suppliers, and other stakeholders, upon which the organization earns competitive advantages; and the structural capital that signifies the business properties, plants, and machinery that has an intrinsic value the organization can extract during difficult times. Following this hypothesis, Wenger, McDermott, and Snyder (2013) have expressed their notion that intellectual capital is an amalgamation of all such tangible and intangible business aspects, combining the explicit and tactile knowledge gained through the organizational learning process. Therefore, from this discussion, it has become implied that intellectual capital enables the organization to capture information and to synthesize it into knowledge, which in turn facilitates producing better products and services by using the superior technologies available in the market. Using such tangible and intangible assets, intellectual capital tends to achieve desirable outcome in terms of patents, trademarks, and collective knowledge (Bounfour and Edvinsson, 2012). Wu, Chang, and Chen (2008) considered social capital in broader terms, seeing it as involving each and every entity associated with the society and the environment as a whole and this idea appears to be more applicable in the area of relation management strategies. From the organization’s perspective, Schiavone (2014) has shown that rather than the relationship between different entities directly associated with the organization, social capital also includes relationships with those whose indirect contributions affect the organizational activities in positive or negative ways. However, Tarmizi (2008) has argued that those organizations that have placed a greater emphasis on social capital have gained long-term success in the market. He has justified his argument by stating the inclination of such companies towards establishing long-term relationships with environmental and social attributes has facilitated more brand recognition, improved brand awareness, and increased customer loyalty, which has given the bottom line of those companies a big boost. Coca-Cola, Procter & Gamble, and Nissan Motor Co. are some of the companies that have experienced substantial advantages by maximizing the utilization of social capital (Jackson, 2013). Communities of Practice Communities of practice also enhance organizational learning, as the system tends to form groups of people with similar interests so they can discuss their knowledge and experiences and enrich each other through shared learning regarding both organizational and social aspects. According to Blackmore (2010), the concept of social capital is too broad to share knowledge; it is the explicit way to obtain knowledge. Therefore, communities of practice emphasise creating focus groups within the boundaries of the organization so that individual learning regarding a specific organizational agenda can be put forward for the purpose of creating collective learning. Huysman and Baalen (2014) have shown such collective learning through communities of practice enables employees in this close-knit group to perform an assigned duty or any particular job in a cost- and time-efficient manner because of the continuous interaction and input of the multiple knowledgeable entities. Furthermore, Kimble, Hildreth, and Bourdon (2008) have revealed this explicit knowledge-sharing process also promotes innovation and creativity due to the continuous research on the existing theories and practices of a particular domain. Extensive research exposes the drawbacks or loopholes within the ongoing practices, which influences the members of the communities of practice to innovate a system that can overlap the shortcomings of the existing system. In fact, those organizations that create the provision for communities of practice enjoy a better interpersonal relationship among employees, an enhanced culture of teamwork, and a greater employee inclination towards organizational performance enhancement through accomplishing the self-objective of achieving personal and peer learning (Sie, Aho and Uden, 2013). As per the observations of Saint-Onge and Wallace (2012), there is a growing awareness regarding communities of practice, especially among knowledge-based organizations. Sie, Aho, and Uden (2013) have proposed three major components for communities of practice, upon which knowledge and learning can be cultivated within organizations. The first component is domain, which is where organizational members come forward to share their knowledge, experiences, and competencies with the objective to improve the knowledge base of both the individual and the other members of the group. The second component is the community, which indicates the forum where the discussions and activities take place (Blackmore, 2010). The final component is the practice, which refers to having regular sessions for knowledge sharing and learning. Big multinational corporations such as General Electric have been able to gain a competitive edge through the excellent utilization of this procedure (Saint-Onge and Wallace, 2012). From the above discussion, it is evident communities of practice help organizations develop a collaborative structure and make organizations more adaptable to the rapidly changing business dynamics. In fact, such practices facilitate the implementation of those strategies that are best fit for that particular organization, rather than blindly following popular practices. However, Smith and Lyles (2011) have shown whenever a group is forming within the organization, irrespective of its purpose; the probability is very high the group will encounter the evolution of power distance. Economic power practices will lead the community towards achieving its underpinning activities or the completion of a distinct event. At the same time, Lesser (2009) believes if the community holds transactional or any such positive power practices, power and leadership within the group may lead the community towards yielding constructive outcomes and enhancing the company’s performance and productivity. However, if it is relational power, the nature of the previous relationships or the competitive nature of the employees may harm the interest of the communities, which in turn leaves a negative impact on the organization itself (Saint-Onge and Wallace, 2012). Soft Systems Thinking Wang, Liu, and Mingers (2015) have defined soft systems thinking as a distinct approach for resolving critical issues related to the organizational lifecycle. This is a sophisticated tool for answering organizational problems through facilitating constructive interactions among the organization’s stakeholders. The stakeholders can act as either inhibitors or facilitators to exercise structured or unstructured interaction for the purpose of arriving at a constructive decision regarding the problem the organization is currently encountering (Flood and Romm, 2007). Mingers (2014) has shown how incorporating soft systems thinking has transformed the conventional organizational thinking process into its contemporary version. Soft systems thinking believes that rather than improving individual organizational processes, the organization’s objective should be to develop the overall process so that a holistic growth can be obtained. To be more specific, all individual organizational processes are interlinked; therefore, according to soft systems thinking, the organization’s overall performance can never be achieved if concentration is not placed on all the processes at once. According to Flood and Romm (2007), soft systems thinking have been able to convert the traditional emphasis of the organizations from systems equipment to human resources. It has also shifted organizational focus from profit maximization to revenue optimization so that organizations can comply with the social and environmental norms. In fact, Hasan (2013) believes soft systems thinking has completely changed the bureaucratic and authoritative concepts prevailing in traditional organizations and has incorporated democratic systems, which has created the provision for further learning, creativity, and innovation within organizations. Jackson (2013) has termed soft systems thinking as a human activity system because it involves the concept of pluralism, a system where a group of stakeholders coexist for identifying organizational problems and for formulating real-time solutions based on their practical knowledge and experiences. The system’s underlying philosophy aims to derive all possible interpretations of the reasons behind organizational problems and to provide constructive solutions through the identification of potential constraints. For the purpose of problem solving, a conceptual model has also been developed under soft systems thinking, showing the interconnections among the problem’s rationale in order to draw an efficient solution (Ramezan and Farahani, 2015). Figure 1: Conceptual Map (Georgiou, 2013) Despite all the positives of soft systems thinking, Georgiou (2013) has revealed multiple shortcomings of this management system. According to Georgiou (2013), though the objective of soft systems thinking is to recognize the gap between organizational goals and the existing level of efficiency and to provide feasible ideas for the organization to achieve its desired goal, it is incapable of providing exact solutions for problems. Therefore, within the practical organizational context, companies would benefit more if the soft systems management could provide proper exploration for solutions rather than simple descriptions of the problem. Furthermore, multiple explanations of the problem create further confusion, which the organization has to handle in an efficient way so that it does not affect the existing operations (Choo and Bontis, 2002). However, the role of soft systems management in enhancing the organization’s intellectual values through transferring cognitive knowledge is most essential. Therefore, in spite of all such drawbacks, the effort of soft systems management is to create the provision for constant learning and to develop a sustainable business model through elimination of the problems that are deeply rooted in the organization, and it definitely helps organizations to achieve sustainability and to gain a competitive advantage in the marketplace (Smith and Lyles, 2011). Conclusion Knowledge is essential for any organization to experience long-term success. In order to sustain its business practices and to gain competitive advantages, organizations must institute a continuous learning process. However, learning without a specific objective does not hold any relevance within the organizational context. Therefore, organizations strive to incorporate knowledge management that aims to communicate the ideas and information that will be valuable for the organization in achieving its short- and long-term business objectives. The function of intellectual and social capital is to apply all such gained knowledge within the real business framework. Communities of practice tend to understand, monitor, and enhance the acquired level of knowledge to innovate ideas that can further accelerate the ongoing process. Finally, soft systems management strives to identify organizational problems and strategic gaps to help the management formulate further strategies to fill the gap. Therefore, if an organization can effectively incorporate all such sources of learning and knowledge management, the organization will definitely evolve to be more efficient over a period of time. References Awad, E. 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