Information technology and knowledge management has been evolving over the last 60 years. IBM in the US was one of the first organisations to create value by capturing knowledge and combining this with technology to create new core competencies and competitive advantage.
Good knowledge management is defined as applying knowledge within the organisation for the advancement of the corporation. Researching the processes of creation and adopting them.
Over the last 30-40 years we have seen a transformation in the way IT departments are operated. Originally organisations were vertically and horizontally integrated. The US automobile industry was a perfect example of this. Ford and GM not only made cars but they had farms for raising cattle just to provide leather for the car seats. In the last 20-30 years this has dramatically changed. Outsourcing and lean manufacturing was revolutionising manufacturing. Inspired by the Japanese, The Toyota production system (TPS) a set of principles, philosophies and business process to enable the leanest manufacturing.
Organisations now outsource functions and IT is one of those functions. IT departments are shrinking. Lots of staffs are now employed on a contract basis and move from project to project. In the long term this is damaging for an organisation because key development people for implementation will not be available. IT project failure will increase.
The internet has transformed how organisations operate. Product innovation is allowing organisations to develop new types of devices that can connect to the internet. We have been moving into an era of wireless communication for the last 10-15 years. This is driving the demand for new hardware such as iPhones, iPods, software services such as Google and greater data storage capacity for all our information needs. Cloud computing is the next step. The delivery of new and existing services across the internet to lots of different devices. Home PC’s with integrated data storage capacity will soon be obsolescent. Large storage facilities with millions of servers are being developed to allow users store all their information requirements.
Core competencies
Constructing and cultivating core competencies takes time. Tough strategic decisions have to happen so that innovation can foster.
I believe that core competencies are an accumulation of separate factors. Here are some base considerations that have to develop before analysis of IT and knowledge management techniques.
1) Financial, how the organisation performs in the eyes of its stakeholders. Are we delivering continuous improvement?
2) Customers, how do their clients see them? Are they meeting their needs and expectations?
3) Internal process, what do they do well or can improve on in order to succeed?
4) Senior management, middle management and employees who embrace technology. Everyone is prepared and supports IT practices, whether it’s for improved data gathering or manufacturing processes.
Organisations have to identify the difference between core competencies and supporting functions. Core competencies are fundamental activities of the organisation. Core competencies are the differentiating factors which create competitive advantage for an organisation. Core competencies are unique and difficult to imitate and difficult to transfer. Enabling factors are the supportive functions within an organisation which allows the organisation to compete but not gain a competitive advantage.
The value chain of core competencies is linked together. Core competencies are the processes and application of knowledge within an organisation which the organisation will defend at all cost. Where applicable they will patent, trademark applications and brands. For service based organisations they will hire the most competent employees.
IT strategy can drive business strategy but this can be dangerous. An organisation can fall into a trap of thinking that sustainable advantage can be achieved by continuously investing in new IT. Technology over spend will occur and changes will be implemented within the organisation. Too many change initiatives at once destroys the morale of the employees.
An organisational goal should be to use IT as an internal enabling information processor which improves the speed and efficiency of the decision making process. When IT and knowledge management are regarded this way they have the ability to create competitive advantage for the organisation. In our class discussion we analysed how BMW used IT to improve competiveness of the organisation and reduce the time frame for the development of new cars.
Product Evolution, Continuous Innovation and key organisational skills
In the works of Solomon, Stuart (1997) Antonides et al, Innovation corresponds to the lifestyle norms and values and existing habits and skills of consumers. Clear innovation visibility in the society, i.e. its public use and visibility of its benefit and easy memorising.
Sustainable product development can be through building robustness into process and their effective management. Over the last 20 years outsourcing non core activities has become an industry norm. Organisations have been using outsourcing as a way to reduce operating costs rather than trying to build flexible positive partnerships.
Organisations need to be mindful of how they defend their core competencies. Propriety and key organisational skills need to be managed internally. Design, innovation and creativity should be seen as an integral part of the organisation. The intellect and processes behind product evolution needs to be managed internally.
Product lifecycles are shortening because computing technology permits simulation under different conditions to test the durability of hardware and software.
Identifying the importance of new materials in the design process should be a corporate goal of the organisation. Continuous improvement cannot be achieved without understanding simultaneous engineering. The trends are showing an increasing reliance on IT and knowledge management on all stages of the value chain, from product design to sales and marketing.
Deskilling occurs when an organisation decides to outsource business functions. This can be very dangerous for organisations who fail to understand that the people or technology that performs important operational functions is the intellectual property that differentiates the organisation.
Modularity and open integration
Organisations fail to understand the full consequences of modularity and open innovation. The unintended consequence of modularity and open innovation is that organisational resources become stretched. Organisations have limited resources. Modularity and open innovation creates internal and external competition for these resources. The scale of flexibility between the partners determines the probability of success.
Divergence and discovery are always working against each other. There is a trade off between the cost of losing control of the products technological trajectory and the benefit of aggregate knowledge from other players to promote innovation.
IBM encountered this when they became involved with Bell South in a project called Simon. The objective was to develop a handheld computer with phone capabilities. In this type of fixed partnership each party will continue to invest and reap the rewards only on the element of technology they are responsible for. In the end the device was a failure because it was too heavy.
With flexible positive supplier partnerships the independent suppliers and complementors will not look to engage in different technology paths from the original developer in order to maximise their own payoff. When Sony decided to adopt IBM’s microprocessor for its new generation of video games console some choices affecting Sony’s position on the landscape were affected by IBM.7
These two examples support (Chesborough,2003) when he suggests that openness not only determines the trade off between adoption and appropriability but also influences the development trajectories that follow over time.
Conclusion
Information technology and knowledge management have the capability of giving an organisation competitive advantage. Constructively Information technology can be used to transform organisational practices. During our classes we read how BMW used IT to implement new organisational practices. Conversely in the Rich Con Steel case we read how introducing a new IT system into an unprepared organisation can destroy existing processes. Organisations have difficult strategic decision to take. They can be innovation leaders which will require financial resources, skilled employees and clear objectives. Otherwise they can be intelligent followers and copy the evolving trends.
The unintended consequence of failing to understanding how IT implementation will affect your business is detrimental.
If is introduced in a hap hazard way in which all stakeholders are not supportive it can threaten the existence of the organisation.
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