A Knowledge Management Strategy - Report Example

Comparison of the Balanced Scorecard methodology as a Knowledge Management Strategy with the Knowledge Mapping Methodology. Introduction Management strategies have gained much attention in the recent time with the major driving force being to come up with a defined and a comprehensive way to approach business management. According to Xenia, S. (2001) Scholars have invented various methodologies with some of them, for instance the Knowledge mapping methodology attempting to explain business knowledge and understanding in terms of geographical planning and perspective. The other equally famous methodology is the balanced scorecard methodology which attempts to harmonize all the activities of the organization; the small scale and the large scale in order to arrive at overall business success. In recent times there has been a subtle war of supremacy between the two management strategies with the knowledge mapping methodology claiming that the balanced scorecard methodology is a too complex approach for average organizations. According to David Creelman (2008), the balanced scorecard has recorded considerable success with over 60 percent of firms using scorecards; the companies using scorecards have also confessed success. However even Kaplan and Norton (2006), have expressed discontent that the balanced scorecard is too complex because it concentrates a lot on the managerial staff. Kaplan and Norton continue by saying that slight changes in the managerial can destroy even the most promising scorecard. Concern over the constant challenges faced by businessmen or business managers is growing exponentially; this fact has subsequently led to a quest by many for an all rounded business management strategy with the capacity to provide both guidance and solution to the challenges. Recent studies have shown that most business ventures collapse during the first five years due to lack of a good and comprehensive management strategy. Business strategy is the secret behind any successful business. However there are many different types business strategies with varied approaches and therefore it becomes difficult for the management of a company when choosing which strategy or strategies to adopt. The most important factor to consider when choosing a strategy should be the one with the capacity to stand the constant business challenges while at the same time giving the business the power to grow. The aim of this paper is to compare and contrast two business strategies; the balanced scorecard methodology and the knowledge mapping methodology as business management strategies. However it is important to consider some of the basic ideas behind the two strategies. The Balanced Scorecard methodology. The essence of the balanced scorecard methodology is to provide harmony between the long term goals of a company and its short term goals. The major uniqueness of the balanced score card methodology is that it includes all the activities within an organization with the aim of improving the general performance of the company. The aim of all business ventures is financial success; however financial success depends on other parameters such as customer care, employee satisfaction, business process aspect and the learning and growth aspect for the achievement of the company’s objectives. All of these aspects are important for the success of any company however varied their net contribution. According to Kaplan and Norton the financial perspective does not follow any particular tradition but operates according to the necessity of drawing a comprehensible financial data which can be used for future plans. The ability of a company to provide accurate data within a specified time is an important asset because it provides the company with the necessary facts for future planning and it will therefore help in budgetary allocations for the various departments. The major aim is not to concentrate on the financial aspects alone because it will lead to unbalanced approach and therefore unbalanced results. The balanced scorecard methodology is aimed at using the average success of all the perspectives in order to arrive at the overall business success. For instance the financial perspective depends on other factors such as the efficiency of the data base system of the company, therefore when the database system is flawed then the financial perspective cannot achieve its maximum potential. Most businesses prefer the balanced scorecard methodology because of its flexibility and because it encourages innovation. A business can chose a variety of approaches depending on the one that will be efficient and convenient. The Knowledge Mapping Methodology Knowledge mapping is based on the concept that the aspect of knowledge can be extended beyond the textual approach with the aim of extracting, sharing, utilizing and expanding knowledge. The main logic behind knowledge maps as a way of visualizing and seeking for knowledge in order to understand the things around us. The use of maps began with the use o geographical maps as a way of understanding and locating various features in the environment. The use of maps later expanded and included the use of maps to depict both the known and the unknown. Maps have long been used by the military not only to depict the geographical aspects of battlefields and enemy lines but also to strategize on how to tackle the enemy. The maps provided a way for the military to analyze their performance after the war and therefore a chance to improve on their strategies. The best example in this case is the map used by Charles Minard, a civil engineer who lived between 1781 and 1870. His maps depicted more than just the physical features of the path taken by 422,000 Napoleon’s troops on March 1812 as they were leaving Paris for Moscow but also depicted important aspects such as temperature and other challenges that befell the troops. The most unique aspect of the map was that it was able to summarize all the lessons learnt from the campaign in one volume. Geographical maps and other related visual forms of art only depict relationship of the aspects of the map spatially; however the knowledge maps should have a far much greater and analytical relationship which should have the capacity of showing the relationships in terms of chronological, hierarchical, associative, causal, logical and evaluative perspectives. There are many forms of knowledge mapping that have been adopted by many people to improve the learning process and in the proper understanding of knowledge in general. The knowledge include much more than just the depictions of knowledge in terms of concepts but includes other areas such as logic maps, decision trees, systems of thinking diagrams, knowledge flow charts and mental charts. In essence knowledge maps are a visual representation of knowledge about knowledge instead of just depicting knowledge alone. The reason why knowledge maps have been compared to geographical maps is that geographical maps contains not only the physical features of a place that will help one in finding their way around, but also contain other important aspects such as the weather that one might find important when visiting the place. Similarly, helps in finding the sources of knowledge and information for instance people and databases, and representing the different ways in which the various aspects of knowledge and information are interconnected. Therefore just as the geographical maps require a cartographer to interpret the complex information depicted in the map, so do the knowledge maps require professionals to translate the information displayed in a knowledge map. The major essence of ‘knowledge vee methodology’ is the understanding that all aspects of a business interact with each other. The vee map provides a way with which an organization can reconcile the disparities experienced between theory and practice and utilizing the experiences gained to expand on and retain the already acquired knowledge. According to Rudd(200), vee maps should include: an explanation of how new knowledge relates with the already inherent knowledge, guidance into how to hypothesize challenges which will assist in formulating research questions and how the results can be applied in the day to day life of an organization. The purpose of the vee is to examine on the left what others including the unit desiring the strategy are currently doing (both existing best and past unsuccessful practices) and to use the lessons learned from that to determine better or more ideal practices for the knowledge management strategy. Formulation of the vee map begins from the top left moving down the axis while in the process examining the current state of things and the different approaches that have already been used. At the bottom of the vee conclusions are therefore arrived as to what current practices can be adopted and the reason why they have been chosen. Shortcomings of the current practices are also included in the gaps and the reasons for their shortcomings are illustrated. After analyzing the shortcomings the climbing of the right axis begins and in the process providing solutions for the shortcomings illustrated in the gap and how the shortcomings should be approached. The concept involves working with the aspects of knowledge that are already known and building upon them by eliminating or replacing the weak areas while at the same time adopting the strengths. Comparison of the two methodologies The two methodologies have undergone various innovations throughout the years evolving from their initial use as tools to evaluate performance in different institutions. In the complex business environment of today characterized by dynamism, creativity and competition the tool methodologies have found use as strategic planning and management tools. The two methodologies have the capacity of converting the rather uninteresting strategic plan of an organization into a motto that acts as guidelines for the organization’s day to day activities, guiding the operations from the most complex activities t the more simple ones. The methodologies, apart from providing the framework from where to analyze and evaluate the performance situations of an organization, they also give insight and deeper understanding to business strategists on what actions should be taken and how the various achievements and how the various achievements and failures should be evaluated enabling them to carry out their duties maximally. However there is a claim that fifty percent of the companies that have registered success and claim that they use the balanced scorecard have managed to surpass just a handful high level performance indicators which are not of financial nature. The balanced scorecard is too complex because a gargantuan responsibility of implementing a scorecard project with a tool to drive the completion of the strategy is left to the management. Most companies do not go beyond attending to performance indicators involving customers and processes. However, according to the original idea of the balanced scorecard, this approach is way below the requirement of the methodology. From the beginning the balanced scorecard has been emphasizing on inclusion of non- financial approaches in the strategy. Apparently this is what attracted many companies and organizations to the methodology. However in the recent times there has been change of wind even by Kaplan and Norton who have introduced certain aspects of strategy maps to act as guidelines during implementation. Kaplan and Norton have confessed that strategy mapping is a way to make the balanced scorecard less complex by improving sales and adding quality to products. The measurable essentials they have proposed include sales, quality and skills. Strategy mapping has been considered important because it compels the managerial staff to arrive to a consensus on the strategy they want to pursue; this adds value and credibility to the strategy. Mapping strategy ensures that links are created and that ways of measuring the performance of the links are available, for instance a company can measure both the quality and sales and determine whether improving of one will automatically lead to improvement in the other. Finally strategy mapping can also be easily transferred to other departments in the firm. However Kaplan and Norton still consider the balanced scorecard strategies as the best regardless of how the methodology has benefitted from strategy mapping. However David Creelman still emphasizes on the independence of mapping strategies in that a company can a company can put up a map without considering too much on the measures, but it would be difficult and complex for a company to do the measures without the maps. Another unique but rather disappointing distinction is that the balanced scorecard is always intended for inquiry and communication or control. The major aim o this approach according to Kaplan and Norton is to encourage the debate and communication of strategy. However the approach will only work if everyone in all the departments understands how different approaches relate to each other, and the different ways with which the results can be measured. Apparently due to the need to implement the strategies using fewer resources within the shortest time possible most managements prefer control to learning and communication. The management considers it as a target they have to achieve and will therefore use everything including penalties to ensure that they hit their targets. As a result other members of staff will be coerced rather than taught how the strategy works. The end result will be a total disaster where short term and unsustainable results are realized. The managers take this approach for the sole fear of failing because they adopt the notion that they have to achieve success and in the process ignore the important aspect of learning which gives room to mistakes. David Creelman (2008) states that the balanced scorecard is an example of a situation where all systems degenerate to control systems; systems which are subsequently counterproductive. According to Science Direct Online Journal (2006) by Peter W.G. Morris, Ashley Jamieson and Miles Shepherd, the knowledge vee maps have also recently adopted some aspects of the balanced scorecard methodology. However this was not done due to some shortcomings of the vee maps but as a way of improving performance measurement. The knowledge vee maps can survive on its own even without the inclusion of aspects of the balanced scorecard methodology because the system evolved as a way of gaining knowledge using the most easily understandable way possible, on the other hand the balanced score methodology has only been used extensively in the business world. Construction of knowledge can be extremely tedious but once the concept has been gotten everything else becomes easier. It might take an organization some considerable time to come up with the most efficient knowledge vee maps, but once found implementation and communication becomes much easier undertakings. The balanced scorecard concentrates too much on the achievement of results without considering whether the results are sustainable or the long term implications of the process. The balanced scorecard was initially considered an easy to implement strategy by many organizations. Apparently this notion was adopted because most companies avoided the absolute balanced scorecard which required the creation of links between all the measurement aspects. The companies used versions of balanced scorecard that only concentrated on one or two measurement aspects while ignoring the other ones. According to Kaplan and Norton this was because of the complexity of the true balanced scorecard. Knowledge vee maps on the other hand are easy to follow because they are meant to be educational with the aim of instilling knowledge. Knowledge is acquired by listing down the already available information and the targets to be arrived at; these two aspects will further help in creating a group of knowledge to provide a link. The essence of the knowledge vee maps is to teach people how to acquire knowledge. The knowledge vee methodology also encourages communication between the management and the other members of staff; this is because the process requires that the learner be ready and willing to learn, therefore the management will concentrate on ensuring that everybody in the organization understands the important of acquiring new knowledge. This is contrary to the more complex balanced scorecard methodology which compels management to use all the ways possible to ensure that the targets are arrived at while ignoring the important aspect of learning. Conclusion The degree of similarities between the two methodologies demonstrates how difficult it is to choose which of the two approaches a better knowledge management strategy (Kimiz, D. 2005). However according to the current business atmosphere characterized by cut-throat competitions, it is not enough to just concentrate on the aspects directly related to the business. It is important also to know what competitors are doing in the process. That is why the vee map is more likely to ensure long term survival of a company as compared to the balanced scorecard. The obvious usage of the balanced scorecard as mentioned earlier by over sixty percent companies tends to hide some of the important shortcomings and complexity of the methodology. The use of additional non-financial performance measures is a very prudent decision. On the other hand the use of strategy maps that will help in better communication of the strategy is a key consideration. However the absolute use of the balanced scorecard puts the system of an organizations in a precarious position of evolving into control systems rather that are extremely complex and intricate and with the ability to block the destabilize the communication systems within the organization. David Creelman (2008) advises companies to consider the targets they want to achieve before implementing any scorecard. Learning how to learn adds value to the learning process by creating an educative experience that meets the standards of excellence making knowledge worth pursuing and more sustainable, this defines the essence and the simplicity of the knowledge vee mapping. References Kaplan and Norton, 1996, The Balanced Scorecard: Translating Strategy into Action, Harvard Business Press. Kaplan and Norton, 2006, Alignment: Using the Balanced Scorecard to Create Corporate Synergies. Harvard Business Press. Kimiz, D. 2005, Knowledge Management in Theory and Practice, Butterworth-Heinemann; 1 edition. Mark, G. 2007, Beyond the Balanced Scorecard: Improving Business Intelligence with Analytics. Rudd, D. 2000, The Vee Heuristic. Retrieved on 28th August from www.ase.bolton.ac.uk/teaching/ma/veehandout. Samuel, Willem and Marjan, 2007, Journal of Knowledge Management, vol 11: A Framework for Evaluating Knowledge Mapping Tools. Xenia, S. 2001, Information Outlook, Vol. 5, No. 6, Map your Knowledge Strategy, Auditing and Mapping magazine. Management Site For and by Professionals, David Creelman, 2008, Revisiting the Balanced Scorecard. Retrieved on 3rd September, 2009 from www.managementsite.com/.../Revisiting-the-Balanced-Scorecard.aspx Peter, W.G, Morrris, Ashley J. Miles S., 2006, Science Direct Online Journal, Knowledge Vee Maps. Retrieved on 3rd September, 2009 from www.sciencedirect.com. Read More