Purpose Emerging from Knowledge, Technology and Innovation Lecture 5

Learning Outcomes Define and explore the implications of tacit and explicit knowledge Explain how purpose emerges from knowledge creation Examine the implications of developments in technology for the organisation’s purpose and strategy Identify the main innovation processes relevant to purpose Show how purpose changes with innovation Explain why an organisation’s purpose may sometimes be emergent rather than prescriptive

Introduction - An Emergent Approach to Purpose Resulting in… Knowledge creation Increased revenues Leads to…. Experimental and emergent purpose Technology development Enhanced value added Innovation Stronger sustainable competitive advantage

Creating New Knowledge Main characteristics of knowledge: Knowledge is a resource of the organisation Knowledge could be created – that opens new opportunities Knowledge creation is essentially an emergent process

Knowledge – strategic origins and definition “Knowledge is the business fully as much as the customer is the business. Physical goods or service are only the vehicle for the exchange of customer purchasing – power against business knowledge” Drucker (1964)

Knowledge – strategic origins and definition “Knowledge is a fluid mix of framed experience, values, contextual information and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers, In organisations, it often becomes embedded not only in documents or repositories but also in organisational routines, processes, practices and norms.” Davenport and Prusack (1998)

Knowledge – strategic origins and definition Knowledge is not just data Knowledge is not just information

Knowledge – the distinction between tacit and explicit knowledge Explicit knowledge concerns s codified and transmittable in formal systematic language – often, but not necessary written down. Tacit knowledge is personal, context specific and much harder to formulate and communicate – often, but not necessarily, hidden and not formally recorded.

Knowledge – the distinction between tacit and explicit knowledge Tacit knowledge Costing procedures codified in company accounting manuals New product development though formal company review procedures Company patents and legal contracts A company’s written history of its past events and experiences, successes and failures – often very limited Training schemes and apprenticeships programmes that develop ad teach best practice Practical and unwritten procedures for unblocking production stoppages Informal networks and procedures for sales order processing Multifunctional team working on new projects that rely on informal contacts Experience of what has worked in practice in branding development over a number of years Specific company treatments of some detailed aspects of management accounting

Knowledge audit and management Skandia value scheme Market value Adjusted shareholders equity financial capital Intellectual capital Human capital Structural capital Customer capital Organisational capital Customer base Innovation capital Customer relations Process capital Customer potential

Knowledge creation and purpose Conversion and communication of existing knowledge Knowledge creation and acquisition processes Knowledge transfer processes

Conversion and communication of existing knowledge Four modes of knowledge conversion To tacit knowledge To explicit knowledge From tacit knowledge Socialisation Externalisation From explicit knowledge Internalisation Combination

Knowledge creation and acquisition processes According to Davenport and Prusack (1998) we have six mechanisms that will assist in knowledge creation. They are: Acquisition Rental Dedicated resources Fusion Adaptation Network

Knowledge transfer processes Proactive decision to transfer knowledge Involves people and groups

Knowledge creation and purpose A new definition of purpose – emerges from the acquisition of knowledge Knowledge adds value and assists the organisation in sustaining its competitive advantage: knowledge is a resource for the organisation (RBV) Applying and generating knowledge is a capability Therefore: Replicability Imitability VRIN

Knowledge creation and purpose Present Problem solving Core resources Importing knowledge Implementing and integrating External Internal Experimenting Future

Using technology to develop purpose and competitive advantage Technology and competitive advantage Survey of existing technologies Development of technology strategy New products Possible growth opportunities in new areas Embryonic, new stars Mature products Cash cows New possible opportunities and competitive threats Mature technologies New technologies

Innovation and Purpose The strategic role of innovation Customer needs analysis – market pull Technology development analysis – technology push Innovation Technology push Market pull The development of new initiatives in technology The analysis of customer needs