Published on 2012/08/22
Learning organizations require employees who are agile and ready to completely redefine their processes as new knowledge is acquired and applied. Higher education institutions must ensure they are providing students with an understanding of how to function in the knowledge economy. Photo by Sergej Khackimullin.

As markets veer, technologies mushroom, competitors proliferate and products and services go kaput, uncertainty and change appear to be the only certainty.

In this environment, the biggest advantage successful firms have over competitors is knowledge and the way they manage it. Successful companies consistently create and propagate new knowledge throughout their enterprises, embodying new habits and technologies fast. An organization must believe its existence is dependent on knowledge and the path of continual transformation which it engenders.

But when it comes to managing a knowledge-creating company, managers frequently “talk-the-talk” but do not “walk-the-walk”. They talk of “brain power” while failing to understand the nature of an enterprise centered on creating knowledge. They talk of “intellectual capital” without having the foggiest idea of what this truly means.

These managers believe that real knowledge is quantifiable data, procedures that are already systemized, or explicit universal principles and the like, leading them to perceive the company simply as a sort-of data processing machine. They believe hard data is a measurement of new knowledge and its value is represented in numbers such as lower costs, timeline metrics and improved ROI. Although important from a bean-counting perspective, mathematics as an appropriate means of measuring knowledge is completely inadequate.

For examples on how to properly measure the vital role of knowledge in organizations, look at successful organizations that nimbly respond to customers, create new markets, rapidly develop new products and dominate emergent technologies (the word technology is used here in its full context, which includes cognitive breakthroughs which produce innovation/improvements) over time.

Their success is in their approach to managing the creation of new knowledge, exemplified in their recognition that creating new knowledge is not simply a matter of “processing” objective data but in tapping tacit and highly subjective insights, intuitions, hunches and ideals of individual employees. Underlying this process is the concept of personal commitment and an employee’s sense of identity with the enterprise and its mission. Mobilizing employees’ commitment and embodying tacit knowledge in actual technologies, products and procedures, requires managers who are equally at ease with images, symbols and slogans as they are with hard numbers.

Making use of such knowledge requires “soft” skills which are indispensable tools to achieve continuous innovation and ongoing learning as a way of operating, interacting and thus, managing. Success comes from a holistic approach to knowledge, based on the fundamental insight that organizations are living, breathing organisms which have a collective sense of identity and purpose, even an organizational equivalent of self-knowledge. With this insight it is clear that a knowledge creating enterprise is as much about ideals as ideas, which fuel innovation, as innovation is to recreate the world according to a particular vision or ideal.

Thus, to create knowledge means to quite literally recreate the company and everyone in it in a non-stop process of personal and organizational self-renewal. In the knowledge-creating enterprise, inventing new knowledge is not a separate, specialized activity (eg., R & D, Marketing, Strategic Planning), but an entire way of behaving—indeed a way of being in which everyone is a knowledge creator and innovator. This culture is the central purpose of the company’s human resource strategy, thereby placing knowledge creation at the very center of the enterprise.

In this spiral of knowledge creation is articulation, converting tacit knowledge into explicit knowledge, and internalization, using that explicit knowledge to extend one’s own knowledge base. Both require the active involvement of the self, therefore the concept of personal commitment and an employee’s sense of identity with the enterprise and its mission. This is fundamental to mobilizing employees’ commitment and embodying tacit knowledge into actual organizational outcomes. Indeed, because tacit knowledge includes mental models and beliefs in addition to know-how, moving from tacit to explicit is really a process of articulating one’s vision of the world, both what it is and what it ought to be. So when employees invent new knowledge, they are also reinventing themselves, the enterprise and even the world that surrounds them. When managers get this, it dawns on them that the critical tools for managing knowledge creating company look very different from those found in a top-down, command-and-control organization.

In this second installment of my Learning Organization series, the question educators and administrators must ask is this: are our programs producing graduates to perform in the dark world of “idea of authority” companies, or graduates who will thrive in a bright new world of companies centered on “authority of idea”?

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Readers Comments

Paul Rothwell 2014/06/24 at 6:22 pm

Great article Mr. Dearing!
Through my English classes here in Buenos Aires, Argentina I’ve been helping companies become Learning Organizations.
The spread of Learning Organizations around the world is a hopeful sign. Namely, because it’s the result of the merger between the two most important institutions in the world today, business and education.
Again, excellent article!
All the best from Buenos Aires!

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