All entries for Thursday 13 June 2013

June 13, 2013

The difference between CSR strategy and common business strategy

Effective management of firm resources has been at the core of strategic management. It is based on firm success rests on how firms develop and acquire, organize and deploy resources in competitive market environments. Strategy rarely focuses directly on wealth creation or profit, but rather on the intermediate or proximate goal of competitive advantage. Profit in this scheme, is the end result of having a competitive advantage and leveraging it. Create competitive advantage, get your products and services to the market and the profits should come.

Social strategy is a throwback to earlier strategy models that take into account the firm's internal environment (resource and value) and the organisation's reliance upon and interaction with an external environment composed of both market and nonmarket factors. The raw materials of corporate social strategy are social issues and stakeholder positions on those issues. From there, firm develop social action projects that acquire key resources from the environment and build on critical firm resources which in combination, are difficult to imitate and lead to the creation of new products and services that provide additional value for current or new customers.

Barriers of knowledge management

Most of the barriers to effective knowledge management involve people. Human are complex with divers psychological needs. Most knowledge management systems require that data ad documents be stored in knowledge bases. From an organisational perspective, the process of building these knowledge repositories can be very time-consuming, labour intensive and costly. People are already busy and sharing knowledge may mean changing the way they work or adding extra steps to the process. For example, people may not want to read the other's writing before writing their own PMA, because their idea can be influenced by others, or follow the same the process as the others. The gap between what people actually so to perform their jobs and how it is documented is difficult to bridge due to the spontaneous actions people take in response to unexpected challenges and problems. Knowledge bases that require a great deal of upkeep may tend to fall into disuse and decay due to obsolete information. Also information taken out of context can be misleading or misinterpreted. Sometimes, too much information is available and people unable to assimilate it due to the volume and lack of appropriate tools.

Knowledge management Strategy

  • Collaborative hypermedia is good for informal knowledge type and linking ideas without specifying relationships or roles. It is useful for documenting discussions and related documents for organisational memory.
  • Learned lesson databases involve articulation of the assumptions and processes that are followed when determining a solution to a particular problem, in a format that can be later retrieved.

These types of systems are software and database tools that capture and codify tacit knowledge. Most knowledge management systems involve some aspect of computer information technology. However, this is not the only way, and organisational knowledge can be effectively managed by employing traditional mechanisms such as cross functional project teams. Formal mentoring programs will allow employees to share their expertise with others

The following process is offered as a guide for actions that should be considered when implementing a knowledge management system:

- Assess the organizational culture to ascertain the values, mind sets, behaviours, and outputs. Determine whether some areas may need reengineering. Areas to consider are organisational structure, reward system, networks available and performance appraisals.

- Identify stake holders. Determine who needs to know, when do they need, how do they get the knowledge they need now. What can be done from a human resource perspective to facilitate the acquisition and transfer of the knowledge needed. Establish buy-in from those involved ensuring cooperation and contribution.

- Determine what knowledge or types of knowledge are critical to the organisation.

- Determine where they knowledge currently resides, i.e. databases, people, documents and external sources. Is it available or will an investment in people or equipment be necessary? Does it come from communities of practice, if so, how can other such groups be encouraged?

- Determine how the knowledge is created. What processes are currently in place for generating new knowledge?

- Select a business area or process to initiate knowledge management. Keeping the project small will help to keep it focused and will enable management to better assess the success/failure of the program.

KM and company culture

Knowledge creation in firms cannot only rely on technology and technical knowledge, knowledge develops if the firm acts as a social community and specific skills of orienting communicating, translating and diffusing "how to know" are developed (Turvani, 2001). These skills, in the form of visions, cognitive models, and idiosyncratic interpretations of reality, are built up over time and they give a firm its own specific character and path of development. It should closely relate to company culture, with the environment and facilities for employees to learn and develop. Company culture differentiate companies from each other, each company have their own way to improve performance. Knowledge management has been widely considered as consisting of processes that facilitate the application and development of firm's knowledge assets.

Organizational competence also condition the way activities fit and reinforce one another, which in turn sustain the operational effectiveness. They are built internally through complex social and learning processes, organisational competencies are causally ambiguous, and consequently they are difficult to trade or imitate, scarce, valuable, and non-substitutable. These characteristics make them the source of sustainable competitive advantage, and thereby long-term profitability and improved performance in long run. In fact, organisational competencies, when leveraged into products and services, generate value and abnormal profitability and impact consequently the overall firm performance.

In fact knowledge asset management are seen as a set of intangible resource, assets and skills, which interact with each other through learning mechanisms. Knowledge management process enable the generation of new knowledge, and the development of organisational routines that form the building blocks of firm's competencies or the way it performs its operational processes and activities.

Knowledge Asset management support business performance

The management of knowledge asset impact business performance. And the business performance is equates to value generated for the key stakeholders of an organisation. The generated value is the result of an organisation's ability to manage its business processes. Which means the effectiveness and efficiency of performing organisational processes are based on organisational competencies. The management of knowledge asset enables an organisation to grow and develop the appropriate organisational competencies. Therefore, the fact that organisational competencies are based on the effective and efficient management of knowledge assets put it at the heart of business performance and value creation.

The effectiveness of knowledge asset management provides firms with an ability to constantly reconfigure accumulate and dispose of knowledge resources to meet the demands of a shiting market. The strategic management scholars refer this process as dynamic capability (Teece et al., 1997; Eisenhardt & Martin, 2000). Dynamic capability basic means the strategic routines wich firms use to achieve new resource configurations as markets emerge, collide, split, evolve and die. The dynamic capability is unique to individual firms, reflecting their specific path-dependencies and hence are considered the source of sustainable competitive advantage and long-term excellence performance.

June 2013

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