Company’s Approach to Strategic Management of Knowledge and Organizational Learning

COMPANY’S APPROACH TO STRATEGIC MANAGEMENT OF KNOWLEDGE AND ORGANIZATIONAL LEARNING

No century in human history has experienced so many social transformations and radical ones as the twentieth century (Peter Drucker)

Current happenings in the management of corporations elicited rising awareness in the position of knowledge in the form of intellectual capital in organizational performance and profitability. In economic theory knowledge was envisioned as externalities and attention was given to labor and capital as the primary factors of production. Today technological advancement and knowledge are crucial to organizational value chain giving them competitive edge and sustained growth (Porter 1980).

Santos and Takahashi (2013) quoted Falcão & Bresciani as having defined knowledge management as “the process by which an organization consciously and systematically collects, organizes, shares and analyzes its knowledge collection, in order to achieve its strategic goals”.  Some schools of thought view organizational knowledge as an essential fuel for growth and development (Santos and Takahashi, 2013). Organizational knowledge can be seen as a shared set of beliefs about causal relations preserved by individuals participating in a group (Santos and Takahashi, 2013). Organizational knowledge, therefore, is and should be organization’s content. According to Santos and Takahashi (2013) “the pursuit of efforts to retain and use this knowledge in organizations involves management processes, more specifically the knowledge management. Knowledge management is core to strategic management studies of organizations, whose environment is continuously changing, taking place externally and in diverse measures and at alarming rate, necessitating precipitous and incessant changes in the organization. Knowledge management contributes significantly to the understanding of how intellectual capacity/intangible assets might establish the foundation for a competitive strategy, besides the recognition of strategic assets guaranteeing improved outcome to the establishment (Santos and Takahashi, 2013). Organizations approach to knowledge management of intellectual capital or intangible assets invariably determines the overall profitability of the institutions. Rastogi (2002) opined that any business establishment can possibly increase profitably via its management of knowledge for intellectual capital to achieve this singular objective, it however, needs to develop an advanced and workable design of its business system. Profit making ventures are products of inventions of knowledge of humans. To this end, organizations always strive to acquire, nurture, retain and encourage organizational knowledge. Organizations scan continuously for relevant information within and without its environment. This information when organized give rise to knowledge. To further buttress the place of information and knowledge in present day establishments, Rastogi (2002), quoting Prusak and his earlier work, argued that:

An enterprise is a creation of human knowledge. Whether it produces aircrafts or airconditioners, software or semi conductors; it is essentially based on organising, developing, and exploiting a requisite body of relevant knowledge. In fact, the very process of managing an enterprise is suffused with knowledge. Decisions and actions in terms of what to do, why, when, where, and how; depend on an incessant acquisition, processing, and use of relevant information and knowledge. Information is the feedstock of knowledge. Meaningfully organised information constitutes knowledge. Without continual learning, cultivation, and creative use of knowledge; people and enterprises cannot improve and innovate. They cannot develop and enhance their capacity to meet the challenge of constant change. “The only thing that gives an organisation a competitive edge – the only thing that is sustainable – is what it knows, how it uses what it knows, and how fast it can know something new” (Prusak, 1996). In thisn sense, knowledge management and intellectual capital are a natural, and not a new paradigm of business management.

Every organization, regardless of its size, must operate within the framework of changes occurring outside the organizations at global levels and decisions should be based on this context. These changes have threats and opportunities inherent in it and consequently impacts businesses. How these changes affect organizational businesses should be appreciated and understood by organizations. The changes are categorized into social, technological, economic and social (STEP) factors (Kermally, 2002). Social changes relate to how the external environment (society) is changing, like alteration in societal values, attitudes, educational system, population and population mix as well as the role of groups. Technological changes influence the dispersal of ever growing technologies, especially in the information technology and entertainment world. The effects changes in economic on the organizational businesses constitute the economic factor, while political factors are related to government decisions and policies (Kermally, 2002). It has become imperative for organizations to be more strategic in its management of knowledge and learning because the competition in the current business environment is between new business models and not products. The speed at which organizations respond to changes in the external environment depends solely on its knowledge base. This knowledge base consists of the aggregation of employee knowledge – the knowledge worker. The organizational environment is changing alarmingly coupled with attrition rate of knowledge workers. Organizations must adapt to environmental unpredictability by creating structures, cultures and develop, nurture and maintain core competencies aimed at knowledge retention preventing assets loss. More so, where suitable systems are lacking for the creation of knowledge and its utilization, organizations go belly up in leveraging existing knowledge assets. The knowledge management tie of an organization is a function of the interconnectedness of its social capital, human capital and knowledge management (Rastogi, 2002).