Strategic Knowledge
All organizations in a turbulent environment of today focus on the demands for both incremental and radical changes. Designing strategies, communication practices, reward systems, and organizational structures are necessary to enhance changes and innovation in an organization. The most strategical and vital resource for an organization is the knowledge. Understanding whether we know what we are measuring is necessary before measuring something. However, some values of an organization are modified basing on the know-how of the better intricacy of the exact things to be measured, including some hidden resources such as intangible assets (Gray et al, 2015).
Further, the principle of Heisenberg’s uncertainty stipulates that the more estimation of something being inconstant, the more inaccurate it is concerning the measure of the different aspects of life. The presentation to a grave impediment for both profitable and efficient business conduct is significant because of the inaccurate measurements of knowledge concerning its value together with cost. Additionally, when the productivity of the firms and the economies depend more on the experience, then the competent measurement of expertise becomes more urgent (Simon, 1999, p. 34).
Knowledge Management refers to a system that concerns the promotion of a collaborative environment necessary to capture and share available knowledge. The system also promotes opportunity creations for different expertise generation, including the provision of approaches and tools required for applying whatever a company understands while struggling for the accomplishment of the organizational objectives. Corporative organizations have an unlimited activity that includes steps such as knowledge, collection of additional knowledge, knowledge re-usage, and lastly, harvesting large amounts of experience (Nonaka and Takeushi,1995).
Several studies done by the various scholars recommend that what kindles sustainable developments of the organization require broad access to more amount of information. Knowledge in an organization refers to the know-how of people about the products, customers, processes, successes, and failures. Organizational definition of knowledge focuses on three shapes, which include tacit, codified, and encapsulated knowledge differing in line to six salient dimensions. The six perspectives are locus, transferability, expression, acquisition process, economic value source, and finally, observability. Therefore, the three types of knowledge with the six aspects associate strategically with the organizational implications (Grayson and O’Dell,1998).
Knowledge has some repositories, namely, a knowledge that resides in the individual minds, second is the knowledge coded as information, and lastly, knowledge embodied within physical artifacts. Therefore, these repositories economize on the utilization of tangible resources. A metaphor for building construction is a good example of differentiating the three repositories. Use of knowledge accumulation stock and the physical properties of materials in drawing the building plans are an example that describes the first repository of knowledge. Drawings and plans used in constructing the building are examples of the second repository. An example of the third repository is the shaped bricks used in building construction (Boisot,1998, pp. 12-13).
Tacit knowledge definition may refer to the value endowed within meta resource that originates from reflection, thought, and experience remaining resident in the individual brain (Boisot, 1998, p. 12). Implicit knowledge is know-how practical because it has a unique attribute of translating codified knowledge residing in the individual mind (Kogut and Zander,1992). It centers on skill application, proficiency, and performance connecting to an achieved, accrued, and cultured experience. Further implicit knowledge is described as uncodified, slow in transferring, obtainable through observation and imitations, and it is expensive. Even though tacit knowledge entails complex collaborative structures, the application of continuity and intimacy notch reveals it (Choo, 2002).
Amongst the three forms of knowledge, tacit may be the most valuable knowledge because it establishes a basis for its derivation. It is the source for both explicit and encapsulated knowledge and may have value without depending on them. Members of an organization use tacit knowledge to carry on their activities because of its ability to remain resident within individual minds (Choo, 2002). For instance, to write software, programmers apply the tacit knowledge to accomplish the task; however, program users cannot employ properties encapsulated within the program without tacit knowledge. It is also applicable in the music industry by musicians forming the music.
Codified knowledge denotes information and borders on the observation that passes without integrity forfeiture. The value that endows meta resource that originates from reflection, thoughts and experience expressed as information through symbols systems may define codified knowledge (Zollo, 1998, p. 26). Therefore, codified is used to explain that the origin of the information is tacit knowledge. It has reasonable transference and diffusion, and its replication is cheaper than tacit knowledge. A unique characteristic of codified includes non-rivalrous and non-excludable, which makes it distinguishable (Saviotti,1998). According to Teece (1998), codified knowledge create misappropriation outside the organization, therefore, resulting in the firms setting up restrictions when dealing with it strategically despite the explicit knowledge having the positive sides. For example, the codes of the software programs may be explicit according to its possessor; thus, programmers having tacit knowledge are necessary to make the code sensible. Also, the music composers and their readers may consider the musical score as codified.
Encapsulated knowledge may refer to the value that endows assets, which originates through reflection, thinking, and sensors embedded within designs together with functionality of artifacts such as machines and products (Boisot 1998, pp. 12-13). Obscurity of encapsulated knowledge has value appropriation implications, and it allows value transfer and appropriation through market transactions (Teece et al., 1997). For instance, software programs may be encapsulated to users because the user does not require to know; the way of coding programs, the way the program accomplishes its work, and the knowledge used to develop the program.
Advancement in technology has led to the use of information technology that transforms the world into the street grid of information. When technologies are adopted and utilized properly by the organizations, they can promote communication, workflows, and quality of products and services. Also, utilizing databases, collaborative research, and brainstorming provides a chance for the organization to maximize innovational chances and enhance continuous improvement (Barber et al. and Hsu,2006).
Formation of organizational knowledge involves expression of the intellectual information of tacit within individuals into goal and distribution of the codified knowledge insides and outside the firm, however, this statement limit inferring people supplementation to one another to overcome narrowed reality of a person within the creation of the organization knowledge (Ichijo and Nonaka,2006). Strategic organizational knowledge is grouped into a codification strategy and a personalization strategy. The codification strategy deals with the careful act of coding knowledge, and the storage of this type is through databases where it is readily accessible by any member within the firm. However, the personalization strategy connects its developer, and the method of sharing is through direct physical contact. Both strategies promote effective working systems within the firm
New knowledge that has tacit knowledge residing within individual brains is what plays a major role in driving the firm forward. Therefore, tacit knowledge is necessary for the firm to improve worth and value conception, for example, the formation of an organization is because of a business idea established as a result of knowledge rooting within some people’s brain. A typical example illustrating the significance of a firm that develops knowledge such as implicit and codified is within practice communities of Chevron Texaco. The creation of codified is through previous researches, databases, Global Refining Networks, and benchmarking information that provides the best interaction among curios staff and staff with proper knowledge and skill.
Communities of practice are the society of people coming together to share an interest in what they know well with regular interaction to enable them to improve their skills. It refers to a crowd of volunteer individuals having unlimited interaction within a common passion. This situation eventually provides a surrounding that can enable professionals to build and deliberate field of interest and share their experiences in practice while developing a sense of community (Wenger, McDermott and Snyder, 2002).
There are four views that best describe the communities of practice; these views include situated learning, which deals with association into practice by surrounding participation and a hook for knowing conflict exists during the legitimation activities. The second view is the communities of practice and organizational learning; this aims at the production of current knowledge via improvisation and narrative by specialists within a society. In this view, the possible conflicts with the community are unremembered, but the relation between society and other establishments is exposed. The third view is the communities of practice, which is a concern on a comprehensive social situation arising from a sustained common commitment to a native company. The last view is the cultivating communities of practice; this view stands separately as physical and inspiring texts for professionals during the creation of informal groupings for learning within bigger organizations
Elements for communities of interests fall into three categories, namely domain, community, and practice. Members help one another as they pursue their interests within their domain. Communities of practice elements are a practical idea within potential knowledge. Therefore, providing avenues that include government education, organizations, international development, and social sectors. With Chevron Texaco being a typical example, which is used in their functional strategical success all over the networks and achievements for the firm capability.
Organizations and their members most often adopt the aspect of communities of practice because of the realization of knowledge as a vital resource that requires strategical management. The concept entails an approach for aiming at individual and communal systems for their learning and from one another. Several attributes discuss the need for interests of this aspect of practice as a tool for the strategic development of abilities within a company. Communities of practice allow practitioners to be responsible for managing the required knowledge with an understanding of them doing it the best.
Shaping communities strategically boost the response of the organization to dynamic vicissitude within the organizational environment, thus developing new knowledge (Kodama, 2005). However, informal networks comprising of the community and the relationship that are distinct among the members results in knowledge fusion and intensification within competitive advantages. Further, professionals provide a link that can be relied on due to individuals within communities of practice being in the similar business unit and team, having the opportunity to often look within flexible places with unlimited time.
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Performance measurement refers to the collection, analysis, and the process of reporting information concerning the performance of an organization, including its members and systems. It is very vital to identify the core indicators of measuring performance relating to targets while understanding the achievements of the operations of the organization with their performance to strategic purposes and targets. If it is impossible to measure something, automatically, it would be impossible to improve it. The reasons behind the necessity of measuring vary widely across several aspects of what to be measured; this is because of the possibility to understand the importance of measuring due to a complex process of strategy. Therefore, the reasons may include the need of; understanding dimensions of the aspect, recording its functionality, reducing world complexity, the need to provide a sense of management, and the capability of development.
Measurement performance can fall under two categories, namely efficiency and effectiveness indicators. The efficiency indicator involves the improvement of the quality, whereas the effectiveness indicator includes improvement in the organizational processes, which eventually maximize productivity. Therefore, organizations having strategic knowledge management most often purpose to aim at efficiency indicator as compared to the aspect of effectiveness because it can be easily operationalized (Worth, 2016). An effective system of performance measurement is obtainable through features of critical success. Therefore, it is subjectable to variation at any period, and it is unsuitable in every condition. Usually, effective performance measures are implicitly effortless through the entire staff, and it promotes the projected nature in the firm (Turner, 2000).
Performance measurements as a system of boosting improvement in the organizational produce, moreover, still experience various problems during utilization. Past researches explain the unavailability of genuine engagement by organizational managers to the operation of performance measurements is because of the several challenges such as lack of motivation to the best performer and poor leadership. Some parts of the universe experience these challenges, for instance, Africa. Also, organizations facing difficulties of performance measurements experience inadequate capital resources, which eventually lead to an implementation delay of the performance measurement. Other challenges are organizational unsteadiness and lack of culture in performance measurement (De Waal and Counet, 2008).
The opposition of performance measurement towards its entire implementation because of lack of knowledge, poor training, and personal risk fear are among the major challenges of measuring performance. Essex police having a system of managing performance is one of the best examples to illustrate the challenges of measuring performance. The strategical system used by the Essex police is “Plan on a Page” that uses “Key Performance Questions” including “Key Performance Indicators” to allow performance consistency within a department in providing consistent quality services within the financial challenge. The system majorly promoted provision for improved physical services through its visualization, management, and measurement ability of particular fields in the Essex Police, which demonstrates a great significance performance measurement (Marr,2015).
KPI enables measuring the way organizations and individuals operate in comparison to their strategical objectives. When it is positioned well, it promotes a significant navigation tool resulting in the best knowledge regarding performance level (Ap-Institute, 2016). For effective management of performance, seven parameters are to be followed; these steps include the purchase in, motivation, arrangements, analytics, the focus of time, quality of data, and technology (Ap-Institute, 2014). For instance, in an airport, a need may arise to enhance the speed of handling luggage due to high complaints from the passengers, so for the activities to be effective, the manager requires to develop performance indicators. The performance of measurements in an airport was achieved basing on the period of placing the initial case on a carousel; this is because it resulted in the consistent and simple part of the operation due to the airport being used by the various sizes of aircraft.
Intellectual capita can also be called intangible resources. It is defined as an invisible resource of an organization, and it is subdivided into a human, customer, and structural capital, including relational capital. It is a core property of creating value in the current understanding of the economy, thus making it a more significant aspect in a firm environment. According to Kaya (2012), IC is defined as a knowledge system of a firm operating as a set of information, expertise, and data which effect current and future achievements of the company while setting its place to other organizations. Several definitions of Intellectual assets exist, but none of them can give the best definition to it. Many of these definitions describe IA as a non-financial and non-physical resource. However, intellectual capital has a value and returns creation prospect. Therefore, it is important to combine various resources as exact values for the corporate firm as a comparison with the earliest methods where only tangible resources were important (Edvinsson and Malone, 1997).
Some instances of intellectual capital involve individuals, relationships, training, experiences, skills, and concepts. Individual capital describes human beings in a company and their professional intuition. It refers to the things in which each individual can carry them away when leaving the company (Choong, 2008). Customer capital is a relationship value set up by an organization and its clients as portrayed by the loyalty they show to the company and the output. Structural capital includes operational with proceedings for a company; it is self-reliance, quintessence, including aiding structure of individual assets (Edvinsson and Malone, 1997).
Human capital and human resource are two different things as they can be noted in individual positions within an organization. Human resource handles human beings as cost alone, whereas human capital handles human beings as value. In the case of structural capital and information capital. Structural capital provides systems to aid the performance of the workers. It brings them together by providing tools for creating information in the firm, whereas IT is a system adopted to obtain and deliver worthwhile information. Further, customer capita and customer service differ in that customer capital concerns majorly with employees, thus expanding organizational values by associating with customers, their commitment, and products. Customer service, on the other side, provides the necessary products.
On the other side, relational capital, which is also called social capital involves relationships inside and outside the company. Social capital can refer socially to network and collectivity because of people’s availability inside the organization and the intellectual community. Social networks entail dimensions such as cognitive, relational, and structural dimensions resulting in the development of intangible assets through exchange and combination (Nahapiet and Ghoshal, 1998). Following Van (2002), it is difficult to gauge the impact resulting from the management of intangible assets. During his studies, he developed available devices that fit operations of the intellectual capital within the normal operating environment, thus, bringing in methodologies of “scorecard.” The tools are “Skandia Navigator,” “intellectual capital index,”; IC index, “Value chain scoreboard,” “balanced scorecard,” and Intangible Asset monitor.
The complex measurement of intelligence being dependent on subjective evaluation, however, can be the challenge towards measurement (Van, 2002). What to be measured is a way of using measurements in determining organizational achievements despite the process adopted. The best instance for the importance of intangible assets and social networks can be price and profits, for instance, Skandia. “AFS” use resulted in several benefits, such as saving large figures of money over the period, minimizing startup period for brand offices, bringing sizeable savings. Further, reduction of fields of competence development, training expenditure, and training resulting in high strategic learning speed and methodical leadership aiming. Managers have a vital task of ensuring members in and out the Skandia of AFS to be aware of the hidden estimation and position of the organization in addressing situations. In return, the company obtains the ability of the valuable customers to depend and promote association for corporate firm improvement within the account book.
Conclusion
Knowledge management plays a vital role in organizational strategy, and it is available in all organizational objectives, corporate strategy, business activities, and people. Understanding organizational knowledge and organizational performance quantification are necessary for success in strategizing the development of an organization. Successful measuring of performance is impossible with the absence of a solid parameter grasp. Due to the statement by Gray et al. (2015), organizations need to position very well to develop a system of managing resources of an organization. However, “Key Performance Indicators” are required in measuring both efficiency and effectiveness for organizational knowledge management.
References
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