Management of Information Systems and Decision Making - Essay Example

Introduction Organizations need visionary leadership, adaptability, and dynamic coordination to emerge ahead of their competitors. The business environment is also fraught with newer challenges everyday. Companies look for tools that can help the executives to extract valuable knowledge from the sea of data and loads of information. Knowledge, thus, becomes a valuable and a strategic resource of an organization. It is important that the organizations have knowledge management strategies in place in the increasingly dynamic business environment. Knowledge management strategies, in turn, profoundly affect the organizational design. .Knowledge Knowledge is embedded in procedures, software and equipment, various documents, databases, and online repositories. Knowledge is of two types: explicit and tacit. According to Wilson (2002), knowledge involves mental processes of comprehension that go on in the mind and only in the mind. This is also referred to as the tacit knowledge and it is transferred via inter personal or social relationships (Zack, 1999). Knowledge exists explicitly as codified in form of documents, databases, maps, and blueprints or is available tacitly as routines and experiences resident in the human resources. Knowledge creation is context dependent in terms of who participates and how they participate. Knowledge is one of the most important assets of an organization. According to Wilson (2002), the knowing mind assimilates, understands, comprehends, and incorporates information into knowledge structures of the mind. These structures are unique and biologically determined (Shutz, 1967 cited at Wilson, 2002). The primary focus of knowledge management initiatives is to develop new applications of information technology. The explicit knowledge is tapped, retrieved, stored, shared and documented either manually or digitally. Knowledge has the power to change the organization itself (Zack, 1999). Knowledge created and used within the company can be called tacit knowledge (Zack, 1999). Knowledge Management Knowledge management emerged as a separate discipline only in the 1990s. The first generation knowledge management sought to improve information sharing within an organization and second generation knowledge management strategies focus more on organizational processes (Hovland, 2003). Knowledge management, much like knowledge itself, is devoid of a single universally accepted definition. It has been defined as the process of organizing, transferring, and using the expertise available within an organization. Knowledge management can also be defined as systematic management of vital information along with its creation, organization, use, and dissemination. Santosoz and Sermacz (n.d.) cited at Smith (2005) define it as those set of processes and systems through which organizations generate value from their intellectual and knowledge based assets. Broadly processes by which organizations distribute and utilize raw information into relevant knowledge to achieve their goals fall under the domain of knowledge management. Knowledge management often involves identifying and mapping intellectual assets within the organization (Barclay and Murray, 1997). Thus, it is clear that knowledge management is a process, and not a technology, for managing organizational knowledge. It generates knowledge for competitive advantage, helps to share best practices and technology and facilitates collaboration and learning. Knowledge management requires equal participation and an ideal interface of technology and human resources to develop best practices. Through knowledge management an organization processes internal and external information and makes decisions and implements them. Knowledge management helps resolve cultural, communication and co-ordination issues in an organization. It makes information available to the right people at the right time to create value. Knowledge management helps individuals in organizational settings create, store and use knowledge. In the ultimate run the aim of the strategic knowledge management is to contribute to better products, timely innovation, satisfied clients and customers. Development of a knowledge management system also entails codifying organizational procedures and practices (Pentland, 2003). Knowledge Management Strategy Strategy is a clear concise statement of purpose, and vision, derived from organization’s basic philosophy. Knowledge management strategy identifies key needs of the organization and helps it to ‘become a knowledge enabled organization.’ Developing knowledge management strategy gives an insight into how the organizations operate and understand the challenges that confront it. Knowledge management strategy is to get the right knowledge to the right people at the right time. Traditionally, only accounting and measurement systems were used to demonstrate increased efficiency and productivity that followed knowledge management strategy. It is necessary that the knowledge strategic management plan consist of clearly defined objectives, budget, cost benefit analysis, people, process, data and technology assessments and measurements (Smith, 2005). One of the chief concerns of the knowledge management strategy of an organization is to document, use, and share information. An effective knowledge management strategy enables an organization to share, codify, and disseminate knowledge inside and outside of the organization. According to Callahan (n.d), knowledge strategy is two-pronged; encompassing actions that are intended to result in anticipated business outcomes and actions that emerge out of the complex business activities undertaken within an organization. Strategically oriented measurements are focussed on assessing knowledge management through metrics. The metrics help convert uncertain processes into a scale that measures assets, competencies, efficiency, profits, and loss. Such models of performance measurement help foster ‘single loop learning’, which enables the managers to take corrective action if and when the processes tend to be inefficient (Hovland, 2003). Knowledge management strategy, thus, is inextricably linked to organizational design. A discernible change effected by the knowledge management strategy that influences organizational design is the emerging trend of creation of position of Chief Knowledge Officer in large organizations (CKO). Organizational Design There is a profound relationship between organizational design and knowledge management strategies. Organizational design is the set of procedures used set in motion to effect suitable changes in the organizational structure and make it more efficient. Hence, it is the bedrock of competitive advantage and performance. It aligns information technology and flow of information with people, processes, and strategy of an organization to enhance organizational capabilities and achieve desired outcomes (Autry, 1996). Characterized by decentralization, empowerment, and delegation it is the process of creating alignment of organization’s structure with its mission. This entails monitoring complex relationships between tasks, workflow, responsibility and authority, and ensuring that all these support the objectives of the business (Roberts, 2007). The ongoing process of aligning the structure and mission of the organization by making short-term routine changes as well as intermittent large- scale changes is called the organizational design (Burton, DeSanctis, & Obel, 2006, 5). The basic goal of organizational design, thus, is to align organization’s demand for information processing with its capacity for information processing (Burton, et al., 2006, 5)The quantum of information processed by the decision makers is directly proportional to the uncertainty of the task involved (Galbraith quoted at Burton, et al., 2006). Organizational design can also be defined as the complete specification of strategy, structure, processes, and people, coordination and control, and incentive component of the firm (Burton, et al., 2006, 5). The strategies of knowledge must be concurrent with the form of the organization that is adopted. Knowledge must be ‘managed’ and organization must be set up in such a way as to allow this knowledge management its optimal expression (Jansen, et al., 1999, para 1). Organizational design integrates the human resources with information systems of an organization and it matches as closely as possible the form of an organization to its purpose. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful (Autry, 1996, para 1). According to Galbraith cited at Jansen, et al. (1999) organizations are information processing systems. The design of an organization should be such that they optimally support the decision making process and enhance the information processing capacity and reduces the need to exchange information (Jansen, et al. 1999). On the other hand, organizations continually, gather, convey, utilize, and create knowledge with the aid of information (Jansen, et al. 1999). Organizations are contrived social systems through which groups of people seek to exert influence or achieve a stated purpose. Design of an organization establishes linkages between people, processes, information, and creating framework for goal attainment. Design process includes mapping and setting up administrative and technological subsystems to achieve its aims and objectives. A Contingency Model for Knowledge Management Organisations are increasingly working in dynamic and complex environment. Since organizations function in a dynamic and a complex environment, the contingency model is designed with variability and complexity as the changing factors. The organizations, too, can be designed according to the acceptance of variability and complexity in their work process. Organizations need not only be able to deal with uncertainty and complexity but also, in some instances, be able to step up the level of complexity in order to optimally create knowledge. Complexity is created from the work or the environment. Variability stems from speed and unpredictability of developments in the environment. In our model, it is the fluctuations in the market demand of the product. The organization with low uncertainty, and lower level of knowledge creation would be focussed on continued production of one type of a product or dispensing the same level of service. Organizations that fail to adapt to the degree of complexity and variability will ultimately not be able to meet the demands of the changing environment. No organization can have a perfect fit with any one quadrant, but a comparative analysis of two organizations can be made with the help of this contingency model. Model knowledge strategies are dynamic and not static in nature. These strategies fit with a specific environment but they get altered with an alteration in the environment in order to allow organizations to optimally manage their knowledge. Organizations can actively decide to make a transition from a dynamic environment to a stable environment and make a switch from stable products to a more active innovation. Knowledge creating organizations can be transformed into knowledge utilizing organizations and vice-versa. Due to high variability, knowledge has temporary life span and hence only temporary usefulness. Diagram: A Contingency Model for Knowledge Management Source: Jansen et al. 1999 Quadrant A The organizations in the Quadrant A are the ones with very little or no propensity for knowledge creation and are involved in a primary process. The level of complexity and variability is low. The staff is continually involved in refining the primary work process. From the knowledge perspective organization form is split into business functions like production, sales, personnel, finance, etc. (Jansen, et al., 1999). Consequently, the organizations in the Quadrant A have difficulty in adapting to change in a dynamic environment and may eventually be driven out of business. The implicit strategy of the organization remains to stay in business as long as possible by ignoring the environmental changes. There is an efficient knowledge management with a centralized system and well laid out procedures to utilize knowledge (Jansen, et al., 1999). Quadrant B The organizations falling in Quadrant B are complex, but not dynamic as variability is low. The work is delegated to professionals of their domains. Knowledge remains explicit and belongs to individual members of the organization. These organizations rely on outside agencies for supply of knowledge, but there is abundant utilization of knowledge. The organizational design is decentralized and classified into separate domains of expertise. Individual knowledge level is implicit or occurs within the professional groups. Increase of knowledge also occurs outside the organization in specific groups and institutes. Modern communication technologies are put to use to share technologies (Jansen et al., 1999). Quadrant C Organizations falling in this Quadrant C are marked by high degree of variability and low degree of complexity. According to Hedlund, (1994) cited at Jansen, et al. (1999) these organizations are structured to carry knowledge in a single business unit. Organizations become manoeuvrable and flexible. The role of implicit knowledge becomes larger and is further supplemented by explicit knowledge, as for example, business-unit sales figures and competition results. Knowledge is focussed on one market segment. Organizational design is characterized by decentralization and market grouping. The market knowledge is at the individual or team level. It focuses on exploitation and codification of knowledge within the units (Jansen et al., 1999). Quadrant D Organizations are structured to explicate implicit knowledge as well as transform old knowledge into new knowledge. The process is called creation or increase of ‘combined capacity’. Knowledge is transferable and recyclable, for example, through intranet, internet, discussion databases, e-mail, and symposia. Organization design is characterized by little control and greater degree of freedom. Virtual organization design too falls in this Quadrant. For combined capacity to work effectively there should be consciousness for importance of knowledge search. Knowledge management strategy for fusion or increase of combined capacity is put to use. A high degree of freedom and minimization of rules and procedures is required (Jansen et al. 1999). Paths of migration Diagram: Migration Path 1 Source: Jansen et al. 1999 There are three paths of migration from one quadrant to another. In the first situation, an organization is characterized by low variability but it is proficient in utilization of knowledge. However, if the complexity is heightened it becomes difficult for it to use measures and procedures for compilation, distribution and utilization of knowledge. The knowledge management scenario changes in case the variability also increases. The ‘aging’ of knowledge begins and the time span of usefulness of knowledge becomes too small. Rather than only utilizing knowledge, the creation of knowledge assumes centre stage. Compiling of knowledge becomes decentralized and knowledge gets market focussed. (Jansen et al., 1999). Diagram: Migration Path 2 Source: Jansen et al.1999 In the second situation, migration occurs from the fourth quadrant to the first quadrant. Initially due to high variability and complexity new knowledge is routinely created here. But as the complexity decreases only familiar knowledge gets to be used time and again. Rules and procedure get emphasized for efficient usage of knowledge. The business process is not focussed on knowledge creation but on knowledge utilization. Diagram : Migration Path 3 Source: Jansen et al. 1999 In the third situation again knowledge creating organization progresses towards knowledge utilizing organization. As the complexity remains high, individual specialists get to use implicit knowledge. The more the complexity is decreased the more the individuals in the same organization will utilize the knowledge. Conclusion Knowledge creation and utilization strategy is of utmost importance in the modern, competitive environment. The way the organization treats knowledge has a bearing on its design. Organizations are increasingly faced with dynamically variable and complex environment. Knowledge should be made as explicit as possible for utilization by human resources working in various departments. Creativity should be fostered and capacity combination should be encouraged in the organization. Divergent types of knowledge should be fused for greater client satisfaction and competitive advantage. Since the organizations do not always have wherewithal to meet the challenges of the knowledge creation the rise of the collaborative virtual organization becomes a necessity. References: Autry, R.H., (1996). What is organization design? Retrieved June11, 2009 from http://www.inovus.com/organiza.htm Barclay, R.O. & Murray, P.C., (1997). What is knowledge management? Retrieved June 12, 2009 from http://www.media-access.com/whatis.html Burton, R.M., DeSanctis, G., and Obel, B. (2006) Organizational design: a step-by-step Approach. Cambridge University Publisher. Callahan, S. (n.d.). Crafting a knowledge strategy. Retrieved June 10, 2009 from http://www.anecdote.com.au/papers/CallahanCraftingKnowledgeStrategy.pdf Hovland, I., (2003). Knowledge management and organizational learning: and international development perspective. Retrieved June 12, 2009 from http://www.odi.org.uk/resources/download/143.pdf Jansen, W., Steenbakkers, W., and Jagers, H.P.M. (1999). Knowledge management and organization design. Retrieved June12, 2009, from http://primavera.fee.uva.nl/PDFdocs/99-25.pdf Pentland, B.T.(2003) Information systems and organizational learning. (R. Galliers & D. E. Leidner, Ed.). Butterworth-Heinemann Roberts, J. (2007) The modern firm. Oxford University Press. Oxford. UK. Smith, S.F. (2005). Knowledge management strategy. Retrieved June 13, 2009 from http://www.gisdevelopment.net/proceedings/gita/2005/papers/62.pdf Wilson, T.D. (2002). The nonsense of knowledge management.’ Retrieved June 11, 2009 from http://informationr.net/ir/8-1/paper144.html Zack, M.H., (1999). Developing a knowledge strategy. Retrieved June 13, 2009 from http://web.cba.neu.edu/~mzack/articles/kstrat/kstrat.htm Read More