The Knowledge Source

Much of the education, training and professional development in the organization reflects the importance of technically specific subjects and the requirement for competency training. Non-accredited learning and informal continual professional development activities are particularly prolific in most organizations. This is especially true for the industries under manufacturing and service sectors.  Indeed, Lantra’s latest research shows that of those who stated that they take part in training or learning, 41.8% report that the learning done is informal, while 17.7% report that the learning is formal and 8.5% report that the learning that takes place is both formal and informal. Official measures of ‘skill needs’, as adopted in other sectors and in UK statistics are more often based on the achievement of accredited qualifications, and do not therefore accurately reflect the actual level of skills or competence in the organization. The use of qualification for measuring skills is further compounded by the following factors:

• Skill levels are likely to be underestimated because such a high proportion of learning does not lead to organizationally recognized qualifications (i.e. those nationally or internationally accredited by the regulatory authorities)
• Many qualifications which are seen to measure academic attainment rather than accredit actual technical skill and industry competence and be less relevant to the organization
• Given the nature of many of the land-based industries, many people have job related skills and generic skills which are not accredited. They perform a variety of roles within a business whose breadth is not assessed by traditional qualifications.

As well as informal learning, differing concepts have been offered as an alternative to this already contested term.  Alternatives to this concept are non-formal, incidental, implicit and tacit.  Whichever concept is used, however, it is true that the value of learning differs according to the perspective of learners and organizations.

Learning is a part of everyday workplace activity and so it is either taken for granted, or not recognized as learning at all. The resulting knowledge is merely seen as part of an employee’s general capability and is not codified.  People possibly equate learning to formal education and find it difficult to talk about their workplace expertise.

In order to move forward, it is proposed that informal learning could be managed to better contribute to the individual and organizational performance.  International evidence suggests that high performance working practices produce better performance/productivity and are closely aligned with informal learning. In terms of the future, it could be argued that what is needed is a move towards organizations understanding that learning is a product of and dependent upon their culture, vision, values and structures.

Individuals will respond positively to an expansive culture that values their skills and makes use of their knowledge.

Thus, if a competency framework can increase the recognition of informal learning, it may influence the approach that employers and employees have the continuous development and maybe then, perhaps, rewards and recognition (in HR context) can be more rewarding and promote greater motivation for the people in the organization.

This may not be only applicable to an informal learning acquisition but also to a formal one (people who are pursuing higher formal education while having a corporate work at the same time).

As those who work in organizations knew, organizations are not homogeneous entities where grand theoretical systems are easily put in place. Change is difficult. A special challenge in deploying knowledge management is that it requires systemic change. Isolated initiatives fail, but are also impossible to revamp the whole organization in one sweeping wave of change.

A consideration for a knowledge management framework, therefore, is that it needs to address systemic change in organizations. In practice, the framework has to provide a coherent language and a point of view that enables the various organizational actors to see their activities within the overall effort to develop organizational knowledge management. This requires that the current state and the vision of the organization can be seen together, in a way that enables the organization developers to bridge the gap. Moreover, we need to take into account the simultaneous existence of several competing frameworks. In any large organization, it is impossible to develop one single approach to knowledge management and simply roll it out.

Knowledge management is already happening, and much of the organizational development is working on solutions to its problems. When we deploy knowledge management, we have to be able to show how it relates to the ongoing initiatives in the organization, as well as to point out those areas where new thinking is required. Those frameworks that do not take into account change, or address issues of migration and co-existence of old and new concepts, practices, and tools, rarely generate major impact. Still remains the questions of how are we going to do this. In practice, knowledge management can be viewed as consisting of several dimensions where change is needed, and we have to address all these to get knowledge management implemented successfully.

To understand and manage knowledge in organizations, we need to understand what knowledge is, how it is used, what its management consist of, and how we can improve organizational knowledge processes. The theoretical and conceptual basis for knowledge management requires a multi-disciplinary approach and rather sophisticated theoretical discussion. In practice, we cannot expect that everyone within the organization becomes an expert in the theory of organizational cognition, meaningful processing, or activity theory. Therefore, we have to package the theory in a way that suits the needs of the organization in question.

Second, as pointed above, we need to explicitly address change. Change is closely related to stability. Therefore, a knowledge management framework has to say something about the organization and their evolution. Change, in itself is created when knowledge changes. Before new knowledge changes knowledge structures and systems of activity within an organization, knowledge has to be accessed, understood, and accepted. Knowledge management framework, to change the organization, needs to include concepts for change management. One major aspect of change management is migration of old forms of activity into new forms. This requires coexistence of activities that are different versions of each other. In most cases this means that new activities are piloted as limited and isolated experiments, which in due course can be deployed more extensively within the organization.

Change often creates resistance. We would argue that in many cases this resistance actually, in itself, is a knowledge management problem, which results from problems with accessibility, acceptability, understanding, but also from problems in the management of attention. In effective organizations, people are busy doing those activities that they have understood to be the most relevant and urgent. Therefore any suggestions for new activities are competing with an existing set of relevant and urgent activities. In many cases, the newness of novel contributions of knowledge management is sufficient to make them less relevant and less urgent than items on the current agenda. This means that in practice there has to be some re-evaluation of priorities in the organization if the organization is going to deploy knowledge management practices. This, in turn, requires that the organization change its vision so that it explicitly includes some aspects of knowledge management. For example, the organization can create a vision of itself as an intelligent organization, and look back from its strategic needs to see how it should prioritize its organizational development activities.

In research organizations, one commonly used approach to deal with the problem of change is to keep the number of possible projects so large that there exist alternatives if the priorities change. This approach is used to make it easier for the researchers to develop their work identity around a strategic vision of the organization instead of specific “pet-projects” that for various reasons may change their priority. A similar management problem exists also for organizational development and innovation. To overcome this problem, the organization may develop a strategic vision from which a manageable portfolio of knowledge development projects is selected. At the same time there have to be processes that re-evaluate priorities from time to time. In knowledge management programs it is often reasonable to generate a set of high-priority implementation projects, and develop organizational knowledge management systems using a portfolio of strategically selected projects. Within each such project, change management, however, needs also to be addressed separately.

Third dimension is time. When organizations need to change, often the scarcest resource is time. Knowledge management is therefore also about management of time. This is so both at the macro-level and at the micro-level. At the organizational level, there has to be time to reflect on the organizational priorities and practices. If the organization is overloaded with current activities and existing initiatives, there is not much that can be done to manage organizational attention, and focus it toward knowledge management.

Time is critical also at the individual level. Learning requires that there is time for cognitive re-arrangement. Often, however, the drive for efficiency means that there is not much time devoted for reflection. A critical tool for knowledge management is, therefore, allocation of slack. Such “unallocated” time, however may need to be institutionalized and its use directed towards the strategic goals of the organization. If a strategic goal of an organization is to increase its competence, however, strategic allocation of slack may equal to making sure that there is enough time for consolidation of experiences, and radical re-framing of existing knowledge structures and competencies. In a knowledge intensive organization, appropriately allocated slack may be its most productive investment. It would be unwarranted to think that one organizational actor can design and implement change. As knowledge management touches more or less all the areas of organizational development, this leads, in practice, to the requirement of involvement of stakeholders in any knowledge management initiative. One way of doing this is, for example, to systematically integrate the change concept in knowledge management initiatives.

An especially important organizational institution is its system of incentives. This is also one of the major tools by which organizational change can be implemented. More generally, the third dimension in the framework relates to the problem of measurement of knowledge. Measurement is an important integration mechanism within organizations that directs managerial attention within an open field of potential interventions. Each measurement system implicitly defines a point of view. Therefore, the design of a measurement system is one of the most fundamental statements of organization’s goals. Measurement also enables us to see whether we are moving towards these goals.

The fourth dimension is informal and formal organizational structure. For knowledge management we have to be able to view organizations as knowledge processes, and discuss ways to implement formal, informal and communication structures that improve organizational knowledge processing. This includes defining new roles and responsibilities that are required for effective knowledge management. Such roles may include, for example, knowledge owners, knowledge publishers, knowledge harvesters, and organization coordinators. In many cases, these roles exist in any given organization, but they are not institutionalized or supported. Much of the most important knowledge management work is currently done simply because people in the organization understand that it is useful and should be done. Often, however, such work is invisible, and instead of promoting and managing it, organizations make it difficult and unrewarding.

The fifth knowledge framework dimension is that of knowledge content. If we view knowledge as a product in itself, the resulting product can be classified and categorized in various ways. To manage the products of knowledge processes, we need compatible and complementary typologies for knowledge. Content can also be related to skills of people. To manage content we may develop expertise directories, skill management systems, knowledge maps, or other meta-models of knowledge content. For example, categorization principles used by information services professionals embed decades of research on knowledge categorization. Especially in electronic environments, however, also issues such as version control and document reliability, quality, and life-cycle require conscious effort.

The sixth dimension of knowledge management is tools. These include various knowledge management methodologies and their representations, but also infrastructure that makes effective knowledge management possible. Most important, such infrastructure includes information and communication technology that can be used to support organizational knowledge processes and their management. For example, collaboration tools, document management systems, organizational memory support systems, innovation support systems, information retrieval tools, and data discovery tools may support knowledge management.

Although knowledge management is often seen as a technological issue, in practice it is widely understood that technology is a relatively small part of any successful knowledge management program. This is so because a tool can not be utilized without the corresponding practice. Although organizational change can sometimes be arranged around the introduction of a specific tool that symbolizes change, manages attention, and structures discussions, the criteria for successful deployment is behavioral change. For example, if the explosive growth of intranets, for example, would be measured by some quality criteria, we might see that the relative amount of actionable information, by any reasonable criteria, is decreasing. We might analyze this situation as a simple example of a situation where the link between knowledge products and activity systems that produce and use these products do not exist. Information is often produced without any clear model why someone would need it. More generally, in knowledge management similar waves of excitement and frustration follow each other when technology gets too much attention compared to organizational practice.

A multitude of dangers await a company that can’t conceive of itself and its competitors in core competence terms or perspectives.

First is the risk that opportunities for growth will be needlessly truncated. Too often an opportunity that falls between the cracks of existing market definitions, and has no natural “home”, gets overlooked. Most companies work hard to delineate precisely unit-by-unit ownership of existing competitive space, but shouldn’t equal attention be given to assigning responsibility for new competitive space?

Second, even if someone in the organization spots a new opportunity, if the competencies that are needed to respond to that opportunity lie in another business unit, there may be no way to redeploy the people who “carry” those competencies into the new opportunity arena. Unit managers are notoriously protective of “their” people, and in few companies, there are no any explicit mechanisms for ensuring that the best talent gests aligned behind the most attractive new opportunities. The result is imprisoned and underleveraged competencies.

Third, as a company divisionalizes and fractures into even-smaller business units (a popular trend recently), competencies may become fragmented and weakened. Business unit boundaries may make cross-application difficult and slow the cumulative learning processes through which competencies are enhanced. Individual business units are willing to support competence-building efforts only to the extent that the competence contributes to the competitiveness of today’s end products. Often, an individual business unit can sustain neither the investment nor the patience to build a new core competence.

Fourth, the lack of a core competence perspective can also desensitize a company to its growing dependence on outside suppliers of core products. Managers (often than not) whose only focus is on maximizing brand share may find it expedient to “rent” a competitor’s competencies rather than invest to build one’s own. This is an often dangerous short-cut to competitiveness.

Fifth, a company focused only on end products may fail to invest adequately in new core competencies that can propel growth in the future. Tomorrow’s growth depends on today’s competence-building. Investment in new core competencies provides the seeds for tomorrow’s product harvest.

Sixth, a company that fails to understand the core competence basis for competition in its industry may be surprised by new entrants who rely on competencies developed in other end markets.

And seventh, companies insensitive to the issue of core competence may unwittingly relinquish valuable skills when they divest an underperformed business. To protect core competencies, a company must be able to distinguish between a bad business and the potentially valuable competencies buried within that business.

Many organizations and human capital management vendors are talking about competencies; however, very few companies have successfully implemented a company-wide competency initiative. Competency initiatives that produce the most significant changes are applied systemically across a range of human capital acquisition and management processes.  Integrating a competency model with the various component applications that make up the next generation human capital management system will be a challenge.  No single framework or vendor offers an integrated suite of products or services that provides “best-in-class” capabilities for the range of human capital management applications. Each organization is unique and there is no single vendor solution available today (though there are enormous attempts in various areas but integration of these available resources is of paramount importance).

The core competence perspective is not a natural one in most companies. Typically, the most basic sense of corporate identity is built around market-focused entities, often called “strategic business units”, rather than around core competencies. Whereas it is entirely appropriate to have a strong end-product focus in an organization, this needs to be supplemented by an equally explicit core competence focus. A company must be viewed not only as a portfolio of products or services, but a portfolio of competencies as well. This proved to be true in valuating an organization or a company. Often than not, valuing an organization does not include human capital or knowledge aspects that drives the organization (say for example in acquisition process).

I have another blog in mind in the area of Acquisitions & Mergers soon…

James Manktelow of Mindtools.com states that the idea of “core competencies” is one of the most important business ideas currently shaping the world, which lies behind the current wave of outsourcing, as businesses concentrate their efforts on things they do well and outsource as much as they can of everything else.

The starting point for understanding core competences is understanding that businesses need to have something that customers uniquely value if they’re to make good profits.  “Me too” businesses (with nothing unique to distinguish them from their competition) are doomed to compete on price. The only thing they can do to make themselves the customer’s top choice is drop price. And as other “me too” businesses do the same, profit margins become thinner and thinner. This is why there’s such an emphasis on building and selling USPs (Unique Selling Points) in business. If you’re able to offer something uniquely good, customers will want to choose your products and will be willing to pay more for them.  The question, though, is where this uniqueness comes from, and how it can be sustained.

Prahalad and Gary Hamel argue that “core competencies” are some of the most important sources of uniqueness. These are the things that a company can do uniquely well, and that no one else can copy quickly enough to affect competition. They used examples of slow-growing and now-forgotten mega corporations that failed to recognize and capitalize on their strengths. They compared them with star performers of the 1980s (such as NEC, Canon and Honda), which had a very clear idea of what they were good at, and which grew very fast.  Because these companies were focused on their core competencies, and continually worked to build and reinforce them, their products were more advanced than those of their competitors, and customers were prepared to pay more for them. And as they switched effort away from areas where they were weak, and further focused on areas of strength, their products built up more and more of a market lead.

Hamel and Prahalad give three tests to see whether competencies are true core competencies:

1. Relevance: Firstly, the competence must give your customer something that strongly influences him or her to choose your product or service. If it does not, then it has no effect on your competitive position and is not a core competence.
2. Difficulty of Imitation: Secondly, the core competence should be difficult to imitate. This allows you to provide products that are better than those of your competition. And because you’re continually working to improve these skills, means that you can sustain its competitive position.
3. Breadth of Application: Thirdly, it should be something that opens up a good number of potential markets. If it only opens up a few small, niche markets, then success in these markets will not be enough to sustain significant growth.

An example: One might consider strong industry knowledge and expertise to be a core competence in serving your industry. However, if one’s competitors have equivalent expertise, then this is not a core competence. All it does is make it more difficult for new competitors to enter the market. More than this, it’s unlikely to help one much in moving into new markets, which would have established experts already.

To identify the core competencies, the following are the suggested steps:
I. Brainstorm the factors that are important to your clients.

• If you’re doing this on behalf of your company or organization, identify the factors that influence people’s purchase decisions when they’re buying products or services like yours (make sure that you move beyond just product or service features and include all decision-making points.)
• If you’re doing this for yourself, brainstorm the factors (for example) that people use in assessing you for annual performance reviews or promotion, or for new roles you want. Then dig into these factors, and identify the competences that lie behind them. As a corporate example, if customers value small products (e.g. cell phones), then the competence they value may be “component integration and miniaturization”.

II. Brainstorm your existing competencies and the things you do well.

III. For the list of your own competencies, synthesize them against the tests of Relevance, Difficulty of Imitation and Breadth of Application, and see if any of the competences you’ve listed are core competences.

IV. For the list of factors that are important to clients, screen them using these tests to see if you could develop these as core competences:

• If you’ve identified core competencies that you already have, then great! Work on them and make sure that you build them as far as sensibly possible;
• If you have no core competencies identified, then look at ones that you could develop, and work to build them; or
• If you have no core competencies and it doesn’t look as if you can build any that customers would value, then either there’s something else that you can use to create uniqueness in the market, or think about finding a new environment that suits your competencies.

V. Finally, think of the most time-consuming and costly things that you do either as an individual or a company, and strategize.

Here’s what I have found that can you help you learn more about competency (individual or organizational is applicable) but I will make another blog about this one. For now, here’s the preview:

Management recognizes the value of technology in leveraging the various businesses within its business organization. It also recognizes the importance of people in making things happen, that core competencies cannot be static but must be continually enhanced and that its set of competencies must be configured either to ensure its competitive advantage or to enter into new businesses. But how do we translate these core competencies (or even systematically define/pinpoint) into a systematic framework incorporating the overall business strategy?

In the Philippines, local companies recognize this need but many of them have no means (or limited) to systematically translate its corporate vision, mission, core values, and core competencies into specific systems and programs except to obtain the expensive services of foreign consultants. This is the very reason, I made a further study as I have mentioned in my previous blog.

The objective here, therefore, is to conduct an initial study and come up a better way (framework) for managing core competencies, which can be utilized for managing core competencies and can be considered as part of an overall business strategy of an organization.

A sample framework for Innovation

What possible benefits that can be achieved?

• For the organization, a strategic and systematic framework for documenting, disseminating and creating knowledge resulting to:

1. An organized way of managing knowledge so that the right information is available at the right time for the right person and level of expertise
2. Providing a learning environment where people can share and develop knowledge through interaction as teams and where business and technical managers can coach subordinates

• At the operational level, a proactive people selection and strategic development process resulting to:

1. A people development plan which is customized, focused and effective
2. A career path which can be easily defined and implemented
3. Greater involvement of the individual and the superior in designing a development plan

• For management and HR, a result-oriented process resulting to:

1. People development interventions that not only enhance people capability and teamwork but also provide a return on training investment that is easily measured and integrated into the existing HR systems
2. An organized system for manpower planning and selection, and for career planning
3. A change in mindset and use of the concept of an empowered workforce

Management will be able to have a better leverage with technology because of the accelerated development of people (we all know that whatever initiatives organizations may have e.g., innovation, expansion, acquisition, etc. — people will always be the essential engine). In addition, it will realize short-term and long-term cost savings in terms of tactical and operational efficiency and improvement in product quality (by shortening the learning curve of the organization). The resulting trained manpower of the organization will become the engine for business development as the organization looks forward to business expansions and market diversification.

In particular, the study of managing core competencies shall:

1. Identify organizational competencies which serve as bases for identifying technical and non-technical specialists and their individual competencies
2. Provide a system which will document and make available to the right persons at the right time, know-how in various areas of the organization and at a range of levels
3. Include a system for evaluating people performance and ascertaining level of expertise of specialists
4. Provide an environment of innovation and promote workplace learning