Change Management and Knowledge Management: Tools for Competitive Advantage - Essay Example

CHANGE MANAGEMENT & KNOWLEDGE MANAGEMENT: TOOLS FOR COMPETITIVE ADVANTAGE Outline Change & Businesses…………………………………………………...2 Stages in Change………………………………………………………..2 Change Management……………………………………………………3 Forecasting Change & Emergent Systems……………………………...3 Knowledge & Businesses……………………………………………….4 Dimensions of Knowledge Acquisition & Dissemination………………4 Business & Knowledge………………………………………………….5 Knowledge & Competitive Advantage………………………………….5 Conclusion………………………………………………………………6 References……………………………………………………………….7 Change & Businesses Industrial competition is driven by change and change is a major factor in the evolution of a given industry (Hill & Jones, 2007). This kind of change is driven by the fact that a business needs to find innovative methods and ways of doing things in order to satisfy all the stakeholders in its operations. De Witt & Meyer (2004) identified change and innovation as a concept that is at the heart of a business’ strategy. According to De Witt & Meyer (2004), business strategy is based solely on change. This is because they observed that as things change with the global, national and industrial environment a business needs to change its internal structures and systems to gain the best of results from its operations. The changes in internal structures to attain this often affect organizational structures, systems of production, distribution and marketing. Smith & Graetz (2011) juxtapose businesses with organisms. They are in a population that includes other businesses which come together to form an industry. They have to build and maintain their areas of competitive advantage to survive and this is evident in the form of growth and the capture of market share. This is in the form of evolution, where the business finds new ways and methods of doing things to get the best of results and overcome competitors in terms of survival and profits. Stages in Change Porter (1998) states that change and innovation unfreezes and reshapes a business’ internal systems to enable it to attain and sustain competitive advantage. This means that change causes an organization to dismantle its existing systems and structures and then put in place new systems and structures to enable it to meet changes in its external environment in the context of strategic planning. Kurt Lewin identifies three stages that businesses go through to create and sustain change (Shapiro, 2010). At the first the organization needs to ‘unfreeze’. This involves the analysis of the external and internal environment and the identification of the need for change. This is followed by the sanctioning of the project by initiation with tope level management and core employees to be involved in the process. This is complemented by the need to examine and understand doubts and concerns. The second stage involves the actual change. At this point, the change is communicated to all the people concerned with it. The personnel in charge of the change need to work hard to dispel doubts and resistance. They then go ahead to empower the stakeholders involved in the actual change. From there, they can take action and involve the necessary people through training and education. The third stage occurs after the organization has put in place the new system involved in the change. This is what Lewin calls “Refreeze”. Here the new system is integrated into the business culture. The management develop sustainable ways to support the change by monitoring and evaluating the new system. Arrangements should be made as and when required. Change Management Change management involves the use of standard and structured approaches to initiate, implement and monitor change in individuals, businesses and society to move it from one point to another (Hillner, 2009) Change management in businesses have strong links to Darwin’s idea of evolution, which is based on the idea of natural selection. Natural selection is defined as “differential survival and reproduction of different genetic forms” (Wilson, 1998). The theory of evolution states, that differences in DNA determines an organism’s chances of survival. Thus if an organism’s DNA is not strong enough to withstand pressures from the external environment, it will die and become extinct and other organisms in the environment will make use of the inputs from the external environment that it was consuming. However, with a sense of stimulus, organisms sometimes evolve or change in the state of their DNA because of the pressures from the external environment. There are several examples of change. Change manifests and intersects with organizations through different ways and forms. Hammer argues for radical redesign if a business seeks to get dramatic or a quantum leap in performance (Hammer, 1993). He goes further to state that re-engineering in business must seek to improve quality service, flexibility and lower costs (Hammer, 1996). He recommends that this is done through so job combinations, checks and controls and the introduction of processes that enables workers to take independent decisions. Disaster Recovery Planning is an integral part of change management. It involves a an analytical approach to ensure business continuity during a change (Kirvan, 2010). A Disaster Recovery Plan is one that ensures that there are minimal disruptions to business operations when there is change process. Banks for instance have systems of backing up their data any time they need to change their IT systems as a disaster recovery system. There is also the famous continuous replenishment programs which come with a lot of change management needs. Toyota for instance used the principles of supply chain management to outsource production of certain parts to external partners (Geunes, 2005). This led to the introduction of a Just-In-Time system which effectively removed the warehousing system because parts were delivered just hours before they were needed (Dess et al, 2006). The transformation from the inventory system to JIT demanded a lot of change management principles to ensure that there were no lapses like delays and lead times. Forecasting Change & Emergent Systems The difficulty in forecasting change is a major problem with change management in businesses. The complexity theory explains that there are complications that come with assumptions and actions that come with the response to changes in businesses (Smith & Graetz, 2011). Astrophysics which is about the quest for analysis of the universe and complicated principles (Regev, 2006) can be compared to a change manager who tries to forecast change like a meteorologist. This is because the future cannot be predicted clearly. Due to this, some managers make so many mistakes in an attempt to analyze the external environment and make internal arrangements to benefit from them. Brown & Eisenhard (1997) therefore recommends that for success in strategic management, businesses should use an emergent strategy that would ensure that new trends and activities are identified by management and then decisions are taken about them before change is prompted. So an ideal organization will be conscious of structured change management and at the same time, is opened to emergent systems and strategies of handling change. Knowledge & Businesses The world changes by the minute and these changes affect organizations and advances people’s knowledge (Awad & Ghazini, 2007). Work in businesses generally require a level of knowledge and experience by workers. However, due to competition in industries and the need to remain competitive, businesses need to get people who have knowledge and keep on updating it. Bell (1973) identify that the world of business is changing to a post-industrial society because people with knowledge and experience in the various sectors are ageing. There is therefore the need for individuals in businesses to have access to new knowledge and experience to enable businesses to survive into the future. Dimensions of Knowledge Acquisition & Dissemination There are several theories that seek to explain how knowledge is given up by more knowledgeable people and also acquired by learners. The concept of cognitive capability which explains this process states that individuals have cognitive capabilities to understand the ‘why’ of a decision in the context of the organization’s history (Wong & Weiner, 1981). Thus, based on this sense of analysis, people get to learn and understand new things that consolidate their knowledge and experience base. Collectively, the cognitive capability and shared belief of workers in an organization determines how much they learn and this in tern determines the knowledge base of the organization (Prusak, 1997) Another dimension of knowledge centers on the fact that “knowledge is not what people know but what people do” (Blackler, 1995). In the practical sense of the world of business, knowledge should therefore be seen as what you do and the kind of experience you have acquired over the years doing that particular thing. So in this sense, knowledge is more of what you repeatedly do and specialize in, rather than what you understand. This is strongly linked to Nonaka’s definition of how knowledge can be acquired by people. He states that there is always an in-flow of knowledge to individuals. When that happens, the information goes through a spiral process, which is backed by what he called ‘Ba’ .(Camarinha-Matos & Ortiz, 2005). “Ba” means space and time, which creates the fertile grounds for the inculcation and consolidation of knowledge in individuals and groups of people (Nonaka & Konno, 1998). Knowledge creation is a continuous process of interaction between explicit and tacit knowledge. Tacit knowledge means the theories and conceptual structures that makes a person more proficient in his broad field of study (Collins, 2010). These are broad understandings of a given area of study and it is inherent in a person and cannot be measured or evaluated easily. Explicit knowledge on the other hand is what is required to be displayed in a given situation (Collins, 2010). On the job, explicit knowledge is the technical and actual knowledge that needs to be displayed to solve a given problem. The SECI model of Nonaka (2000), knowledge transfer is said to rotate around four main events or activities. First of all, knowledge is disseminated through socialization, where people share knowledge through face-to-face communication and shared experience like apprenticeship. The second system is the externalization, which involves the development of concepts, and the consolidation of theories about matters and tacit knowledge, this is mainly abstract. The third dimension is the combination, where the various elements are put together to create a strong base of knowledge. This leads to the fourth stage which involves the learning and doing or internalization, which can be seen as experience and competence in modern business. Businesses & Knowledge Kogut & Zander (1992) state that a firm should be “understood as a social community specializing in the speed & efficiency in the creation and transfer of knowledge”. This therefore means that organizations are learning centers where employees get the chance to learn, gather knowledge and gain experience. Knowledge is identified and harnessed by businesses through two major processes (Grant, 1996). The first stage is called direction, where the firm identifies and codifies tacit knowledge into explicit views and instructions that fits the business’ general and overall needs. After the development of the direction, this should be weaved into the organization’s day-to-day matters so that it becomes a routine for the organization. In line with this, knowledge can be harnessed and used as a tool for the creation and sustenance of competitive advantage in businesses. Knowledge & Competitive Advantage Porter (1998) identifies competitive advantage as a competence or resources controlled by a business that gives it an urge of other businesses in the industry. There are several steps that an organization can follow to use knowledge to create and sustain competitive advantage. The first stage is to use the principles of best practices to identify relevant tacit or theoretical knowledge (Fahey & Prusak, 1998). `When this tacit knowledge is identified, it should be codified or put in a form that enables the business in question to convert it to explicit or specific knowledge in a way that will put it ahead of its competitors (Christensen, 2003). When this is developed, a system of utilizing this for the best returns based on external factors should be identified and put in place for the individuals working for the best results for the organization (Rothberg & Erickson, 2005). After this is done, it should be transmitted to top level management and they should fuse in the benefits of the knowledge transfer system into the decision-making system so that it brings advantages and benefits to the business. Finally, when the knowledge transfer system is established, it should be protected. This is done by branding and keeping them confidential wherever possible. Also, the knowledge system of the organization should be studied regularly and modified as and when necessary. Conclusion Change and innovation are important prompters and influencing factors of strategic management. For best results, organizations must monitor change through a conscious process of change management to make it a source of competitive advantage. Also, due to uncertainty and the inability to predict the future, it is good for businesses to maintain an emergent system where they look out for changes and opportunities and change to benefit from them. Knowledge is also another tool for competitive advantage in businesses. To benefit from knowledge management, a business needs to codify its knowledge transfer systems based on external factors and that affects it. These things must be linked up to management so that it is infused into the strategic strength of the organization. References Awad, Elias M. & Ghazini, Hassan, M (2007) Knowledge Management Delhi: Dorling Kindersley Bell, Daniel (1973) The Coming of Post-Industrial Society New York: Basic Books. Blackler, F. (1995) “Knowledge, Knowledge Work & Organizations” Vol 16 No 6 pp 1021 – 1046 Brown, S. L. & Eisenhardt, K. M. (1997) “The Art of Continuous Change: Linking Complexity Theory & Time Evolution in Relentlessly Shifting Organisations” Administrative Science Quarterly Vol 42 pp 1 – 34 Camarinha-Matos, Luis & Ortiz, Angel, M. (2005) Collaborative Networks & Their Breeding Environment New York, NY: Springer Christensen, Peter Holdt (2003) Knowledge Management Copenhagen Business School Collins, Henry, M (2010) Tacit & Explicit Knowledge University of Chicago Press De Witt, B & Meyer, R. (2004) Strategy – Process, Content, Context – An International Perspective London: Thomson Learning. 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(2005) From Knowledge & Intelligence Creating Competitive Advantage to the Next Economy Oxford: Elsevier Butterworth-Heinemann Shapiro, Andrea (2010) Creating Contagious Commitment: Applying the Tripping Point to Organisations North Carolina: Strategic Perspective. Smith, Aaron, C. T. & Graetz, Fiona, M (2011) Philosophies of Organizational Change Cheltenham: Edward Elgar Publishing Ltd. Wilson, Edward, O. (1998) Consilience: The Unity of Knowledge London: Little Brown & Company Wong, P. T. P & Weiner, B (1981) “When People Ask Why Questions & Newness of Attributional Search” Journal of Personality & Social Psychology Read More