A Strategic Fit For Organisational Leadership Business Essay


Apart from other aims, a companys goal is to be competitive. The business world is dynamic and complex and hence, it becomes challenging for a firm to sustain competitiveness on a continuous basis. In this context, the key to being organizational leader lies in being able to adapt to change quickly. One of the ways is to innovate.

Also, according to Pistorius, a company's success is possible by being competitive which, in turn, is dependent, apart from other factors, on its capacity to innovate. Only achieving the business objectives will not make an organization a leader in the macro context. It is also important to adapt to the change and move nimbly.

The process of innovation can be attributed to the results of the two disciplines KM and CI : information (KM) and intelligence(CI).

This paper is an attempt to find out how integration of CI and KM is a strategic fit for organizational leadership.

Review of Literature:

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Zack (1999) stated that the organization's success will finally depend on the speed at which it can create, capture, store, use and disseminate knowledge and then use this knowledge to develop capabilities that cannot easily be copied by rivals. Olsen, West and Tse (1998) have stated that the key to being an organisational leader lies in the ability to manage change.


For an organization to be competitive, information should support decision making (Porter 1998).


Drucker (1993) said that "Knowledge is one of the key economic resources and perhaps contributes largely to competitive advantage." Keller and Kastrup (2009, p. 7) stated that nowadays knowledge finds a lot of attention and is viewed at as a resource in the corporate world.


The term knowledge management is multi-faceted and at the same time hard to conceptualise (Keller and Kastrup 2009, p. 11). The goal of knowledge-oriented management is the generation of knowledge out of information for gaining competitive advantage. This leads to business success (North 2005, p. 31).

Rastogi (2000) have stated that knowledge management is a systematic and integrative process of coordinating organization-wide activities of obtaining or creating, storing, sharing, re-using, developing, and deploying knowledge in pursuit of major organizational goals.

Importance of KM

"As globalisation and shifting demographics reshape competitive ground rules, companies that fail to treat knowledge management (KM) as an initiative of the highest importance will lose intellectual assets, suffer from employee turnover, exacerbate security threats, and ultimately lower valuations. It's time for enterprises to exert control over KM and treat it as an issue of the highest order." (Murphy & Verma, 2008).

KM and innovation

Probst et al. (2006, p. 235) stated that Knowledge Management is often considered to be a key enabler that creates the opportunity for businesses to use their knowledge assets to improve their own ways of doing business. Nonaka and Takeuchi, 1995 stated that by making use of continuous knowledge management (KM), the organizational innovation is promoted and this plays a key role in the organization's success.

The reasons for turbulence in external environment are global competition…

According to Malhotra (1997), knowledge that is contained in the minds of organizational members is the greatest organizational resource. Malhotra posits, therefore, that knowledge management is not only about managing knowledge assets, but also managing the interpersonal and organizational processes that act upon these assets.

Strategic use of Knowledge turned Intelligence:

An integration of CI and Knowledge Management is a strategic fit for an orgianization to make strategic decisions in the face of changes in the external environment. A term 'Competitive Intelligence enabled Knowledge Management' (CIeKM) is coined as to show the process of knowledge management which is enabled with the aid of Competitive Intelligence.

In the macro context, intelligence can be defined as the capacity of an organization to both anticipate changes in the external environment and manage the knowledge derived from such change for the purpose of innovation to be competitive.

This intelligence if relevant and when actionable can be used against the competitors to get ahead in the changing market.

According to Dr. Gillete, in the scale of Knowledge, information exists in 6 levels:




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Information starts out as phenomenon, which is simply an idea. It then moves up the chain until it becomes wisdom, which is the ability to discern and make judgment calls (Gillette, 2002, p. Table 2).

One can separate a mediocre leader from someone that is outstanding by looking at what level of the scale of Knowledge they operate in. Knowledge workers tend to hover at the Data and Information level and sometimes at the Understanding level. Only a good leader can operate at the level of wisdom and guide the company's future.


The ability of organizations to compete depends on a number of factors. These include but not limited to the organization's internal capabilities and the factors external to the firms: demand conditions, factor conditions, the presence of related and supported industries, firm rivalry and the system of innovation (intellectual property right, skills, education).

Factor conditions refer to inputs which are also known as factors of production - such as labour, natural resources, land, infrastructure and capital. Porter posits that the "key" factors of production (or specialized factors) are created, instead of being inherited. Specialized factors of production are skilled labour, capital and infrastructure. "Non-key" factors or general use factors, such as unskilled labour and raw materials, can be obtained by any company and, hence, do not generate sustained competitive advantage. However, specialized factors involve sustained investment and are thus more difficult to duplicate.

Why the need? What is the need?: Competitive Intelligence

Competitive intelligence:

Competitive intelligence is a systematic process for collecting, analyzing and managing external information that affects decisions, programs and actions of company (SCIP, 2008).

Saayman et al (2008) have explained that competitive intelligence is art of collection, processing and storage of information that people at every level of the organization have access to it, according to their needs and helps them shape their future and will help in safeguarding against competitive threats. This information is about customers, suppliers, technology, competitors and environment.

Priporas et al (2005) stated that the aim of competitive intelligence is identification, management and mitigation of risk, creation of useful knowledge and use of shared information. Vedder et al (1999) have affirmed that companies using a formal competitive intelligence program, have a better understanding of the competitive landscape and Wright & Calof (2006), in this context, have stated that by adapting a wise strategy, they develop programs to increase their competitive advantage.

Competitive intelligence process:

Kahaner (1988) stated that competitive intelligence process is the series of activities of gathering, analyzing and applying information about competitors, products, partners, suppliers and customers for tactical and strategic planning needs of an organization.

Bose (2008) affirmed that experts believe that this useful and effective process take place over a continuous cycle called competitive intelligence cycle (Figure1). The main output of this process is the ability to make decisions that concerned on future that lead to strategic decisions and being able to be agile in the wake of changing environment ( organizational leadership).

Competitive intelligence cycle includes the following steps:

Planning: Here, the needs of the company is defined in terms of, what information is needed? Why is it needed ?

Collection: Involves identifying all potential sources of information and then investigate and collect correct data from all available sources and placing it in a regular form.

Analysis: In this crucial and perhaps the most important step, the analysis of collected data will help in determining relationships, patterns to improve decision making and helps in development of strategies that offer a sustainable competitive advantage.

Publication: It means that analysed information which is now actionable intelligence is communicated to decision makers so that it is used it for decision making.

Evaluation : It is useful step as it helps in reflection of the views and customer information to improve the competitive intelligence process (Bose , 2008)

According to various studies on the competitive intelligence process, the processes listed above is used as competitive intelligence cycle. Even Herring (1999) has stated that to produce competitive intelligence, a methodology known as the "CI cycle" is used, which involves the steps of direction oriented planning, information collection, information analysis and dissemination of information.

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Garber (2001), Miller (2002), FULD (1994) stated that one of the techniques that can be applied in identification of opportunities for innovation is the competitive intelligence (CI).

The aim of CI is to support management decision making. The function of CI is to anticipate the threats from the actions & reactions of rivals and identify the opportunities to grow/innovate.

CI is purpose driven: It is driven by senior management queries regarding many strategic issues including that of continuous monitoring of competitors & trends and to strategizing how to counter the rivals' actions and reactions.

CI is outward thinking: To aid in formulation of strategic moves, CI is focussed on scanning the external environment, understanding of one's own customers, competitors' customers and competition from the existing and potential players in the market.

CI is future-oriented: Rather than wallowing in the past mistakes, CI helps in changing the outlook of the organization towards converting the mistake into learning to capitalize on the opportunities in terms of innovation and creation of additional market for own existing products.

CI is analysis- oriented: As per Fuld (1994), competitive intelligence is explained simply as "analyzed information for decision-making". This shows that the analysis step is the most important one.

Why CI is done in the context of knowledge management?

CI gives signals about the competitive threats and generates an early warning system. It also helps in discovering the opportunities for achieving competitive advantage.

In the context of knowledge, the use of CI lies in creating knowledge and then using of that knowledge. It explores and fills the knowledge gaps existing between the need of senior management and the actual level of knowledge stored in employees' minds, systems and databases. This way, it uses unfiltered information to produce actionable intelligence for senior managers to take strategic decisions.

Because CI is deeply knowledge driven, abundantly future-oriented and extensively used by senior management, CI experts such as Gilad and Prescott have stated that the essence of competitive advantage is core competency for which CI provides the conduit. (Rothberg, Erickson, 2006).

CI and innovation

Competitive Intelligence is a critical enabler of innovation in any organization. Smart organizations do not wait for some external change to happen to make them agile but actively monitor the changing environments and manoeuver by developing cutting edge. The assumption behind this statement is that "companies that don't innovate, die". So, CI enabled innovation is the answer to being competitive.

"Many organizations no longer rely solely on the internal knowledge of employees to innovate" (Chesbrough, 2003). Open Innovation is based on taking advantage of external R&D to innovate in their products and services. It is nearly impossible to select partners of R &D, come up with big disruptive ideas or establish OI collaboration without previous mining of information. All this requires good mining of information in the external environment.

The Open Innovation Model, which supports an effective innovation strategy, is developed by Chesbrough in 2003. It proposes to bring innovation from various internal and external sources. 

Open Innovation model will work well if it is associated to a proper competitive intelligence system. Open Innovation model helps in moving of Competitive Intelligence from a niche to a mainstream position in corporate life. So, even though Competitive Intelligence results are meant for end users at senior management level, they must be effectively disseminated to a broader user base. Competitive Intelligence allows companies to create knowledge-enabling and more collaborative & flexible decision making if they align their Competitive Intelligence process with strategic plan and with collective management representation.

Competitive Intelligence draws upon numerous information databases or resources.

Competitive Intelligence is woven into major business decision processes. It considers that the strategic framework of competitive intelligence process resides in the triad: collection (of information) - interpretation/analysis (of information)- action. Therefore, the role of Competitive Intelligence is to create knowledge from information.

Competitive Intelligence analysis must be circulated among a wider base of users of information. The great amount of data or information is useless without putting it into circulation.

In a recent article "Industry Collaboration: A new era of open innovation", by John Pryor, Head of Data Solutions at CPA, the authors state some principal lines how intelligence can be linked to open innovation in practice and how companies such as P&G or Nokia make it real. But even so, there are still many blank spots.

Competitive Intelligence has been defined as "the capture and delivery of competitive information as part of the process whereby an organization develops an awareness of technological or market threats and opportunities."

Today nobody thinks internal R&D is enough to develop really disruptive product or to work out new processes. Without any external input-impossible! Open innovation paradigm works on the notion that organizations can innovate more cost-effectively, quickly and profitably by combining external capabilities with internal innovation resources.

It's true that social media makes faster than ever the sharing of information and easier than ever to reconnect with hundreds, if not thousands, of people who could contribute to improving your success rate. So, the Open Innovation can provide organisations with many advantages including:

Accelerating time-to-market

Reducing risk in the innovation process

Lowering innovation, R&D and even operating costs

Supplementing internal R&D capabilities with external experts

Open innovation is thus a logical step to take for many small firms. The SMEs in low and medium tech industries indicate clearly that firms who know how to manage a network of innovation partners can seize new business opportunities, become key players in growth industries and turn themselves in highly profitable companies.

Competitive Intelligence Supports Innovation

April 02, 2012 by April | 1 Comment

Competitive Intelligence Supports Innovation

At an Austin area SCIP meeting I was inspired by the keynote speaker Dr. Jay Paap. Paap is a seasoned technology and innovation management professional and now a faculty member at Sloan Business School at MIT.

Most companies come up with an idea and then they ask CI to determine the market. Paap suggests putting this on its head. Use CI to gather information on how the market is changing to determine how companies could capitalize on that change and create a solution to solve a new problem. Paap is a proponent of using competitive intelligence early in the process of innovation. CI can "help anticipate needs by looking at leading industries and external forces affecting your customers" and "anticipate technologies by monitoring sources of disruption…"

Creativity = Need + Technology

"Innovation starts with intelligence." Competitive Intelligence can help companies manage risk by developing business cases when hard numbers are lacking. CI can be used to anticipate the drivers of innovation, adoption of new technology, competitors intentions, and it can provide inputs for project selection, execution, and review. CI "ensures that decision about innovative activities are based on the best available information."

Innovation = Creativity + Fit + Value

Paap definitely understands the value of information and competitive intelligence. Seeing how CI informs innovation adds more value to the CI service and helps companies see the return on investment.

Competitive intelligence led targeting of the organization and shows the competition positions and makes the company to be able for forecasting and developing their markets through analyzing the behavior of the competitions and environment to identify opportunities that in long run will lead to innovation.

Innovation in Design: One of the important issues in design is flexibility, that means goods be able to adjust according to market conditions and changing consumer interests .

• Innovation in the review of the formula: The review of the formula contains changing in present product structure without changing in its components.

• Innovation in services: Researches show that the cost of attracting a customer is seven times of the cost maintaining it, so innovation in services is one of the important issues in competition.

• Innovation in packaging: Generally changing in packaging cause alter the rate of goods purchase or amount of using this in one period and opening up new markets on the goods.


Three Ways to Predict When Your World is About to Change

It can seem like everywhere you look, someone is proclaiming that the latest buzzword will redefine the fabric of the universe. While cutting through the noise to identify truly disruptive innovations can be difficult, it's an important task for competitive intelligence organizations. Affirmative answers to the following questions can be the foundations of the conclusion that a given trend is a disruptive innovation that you need to take note of:

Is it simple, reliable, and convenient, at a low price point? These characteristics simplify adoption, which can help a technology achieve fast uptake. That factor clearly increases the likelihood that a particular innovation will be disruptive.

Is it a combination of existing technologies? Innovations based on familiar, proven building blocks have a shorter path to adoption than those that are completely new and foreign, particularly because they are often perceived as involving relatively low risk.

Does it focus on a small or niche market, and solve a specific problem? When an innovation can gain traction without needing to change the fundamentals of an industry all at once, it has an easier path to disrupting the status quo.

Three Reasons an Innovation Might Not Move Mountains

Just as important as recognizing a disruptive innovation, you also need to be able to identify those innovations that are merely sustaining, meaning that they represent incremental shifts that are not likely to create deep-seated  changes in an industry. Affirmative answers to the following questions can help differentiate sustaining innovations, so you don't mistake them for disruptive ones:

Is it focused on extending an existing product or service? An innovation that improves upon an existing approach but doesn't redefine it is likely to be a sustaining innovation, rather than a disruptive one, corresponding to a competitor in Porter's Five Forces, rather than asubstitute.

Does it target larger markets? When an industry tries to push innovation into a large market, it must overcome a larger amount of inertia than when it targets a smaller market, making it more difficult for the innovation to take hold and be disruptive of the status quo.

Disruptive innovations often start out as a simple substitute for a more complex solution. Sustaining innovation, on the other hand, is an inexorable march to higher complexity: one more feature, one more option, pricing tiers, support tiers. Don't think you're being disruptive with version 9 of your product. You're not.

None of this is to say that sustaining innovation is bad. Disruptive innovation puts competitors out of business, but sustaining innovation generates the lion's share of revenue.

be planned at the beginning (planning step) to serve as

the framework for the whole work in the forward steps

(KAHANER, 1996). Theanalytical framework usually

combines different tools that are chosen to help analyze

and integrate specific information pieces in a structured

and efficient process. The selection of the analytical tools

depends on countless factors that can be taken into account


In order to assertively identify the opportunities for

new products and processes, it is important to combine

technological and market knowledge (DRUMOND,

2005). It is also worthy to emphasize the importance of

understanding the customers' needs for the innovation as a

safe way to successfully introduce new products in market

(DRUMOND, 2005), and an important source of information

to characterize technological opportunities (PORTER,

1991). As for this purpose, QFD is one of the most important

techniques developed in the field of quality management,

and is generally applied in the product development process

(AKAO, 1990; CHENG et al., 1995). Besides that, the QFD

favors the translation of these requirements into technical product and process parameters, ensuring the innovation

focus on customers' needs (AKAO, 1990). Therefore, both

competitive intelligence and QFD technique can be used

to collect and analyze strategic information for product

and process innovation. A

Competitive intelligence is very important to produce

technological knowledge and intelligence for the analysis

of the state of art, technological trends and challenges,

with a strategic vision on competitiveness and customers


2003). The competitive intelligence can be considered a tool

for the innovation process, to observe the market, analyze

the strategies and behaviors of competitors, the behavior of

customers, their values, expectations and needs (KRÜCKENPEREIRA et al., 2001).

According to Fuld (1994), the proposal of competitive

intelligence is to launch the conceptual and methodological

bases which allow the collection and analysis of data,

with the intention of accomplishing the synthesis of high

added-value information appropriated to the decisionmaking process. It concerns competitive processes, since

the organizations are immersed in an extremely dynamic

and competitive environment and need to obtain useful

information from the same environment to take the

opportunities and to neutralize threats.

The competitive intelligence takes place with the

application of a methodology comprising several steps in a

cycle, the competitive intelligence cycle (HERRING, 1999;

FULD, 1994; KAHANER, 1996; DUGAL, 1998). A 6 steps

adaptation of the classical four-step cycle (HERRING,

1999) was developed by the Materials Technology

Information Center (NIT/MATERIAIS), Federal University

of São Carlos, as shown in Figure 1 (NIT/MATERIAIS,

2004). The adaptation was to facilitate the training of

practitioners and the project management.

The 6 steps of the cycle are: identification of needs,

planning, collection, analysis, dissemination and evaluation.

The analysis step is considered one of the most important

inside the cycle (CALOF, 1999). In this step the collected

information will be turned into actionable intelligence

in order to help the managers in the decision-making

process. The use of a structured analytical framework,

normally containing analytical tools (pre-selected in the

planning step) is recommended in the step of analysis

(CALOF, 1999). There are more then a hundred analytical

tools that can be used, for instance: scenario analysis,

reverse engineering, analysis of market, SWOT techniques

(strengths, weaknesses, opportunities and threats), Analysis

of the Industry (Porter's 5 forces), benchmarking, patents

analysis, among others (HERRING, 1999; FULD, 1994).

The choice of the appropriate tools constitutes an important

factor for getting good results (CALOF, 1999).

An CI-QFD analytical framework approach for

innovation support

Having in mind the identification of opportunities for

technological innovations focusing on customers' needs,

an analytical framework was composed by the combination

of several competitive intelligence (CI) analytical tools

and the product development QFD technique. To support

and guide the development of such analytical framework,

three macro-objectives were then considered from literature

review as the theoretical foundation to the selection of each

of the analytical tools. The first one was entitled as 'general

diagnosis' and is subdivided into two micro-objectives:

analyze the organization and its competitive environment,

and identify customers' needs. The second macro-objective

was named as 'technological knowledge' and the third,

'strategic correlations between innovation needs and available

technologies' (MANUAL DE OSLO, 2008; DRUMOND,

2005), as discussed in greater details below:

Macro-objective 1: general diagnosis

The general diagnosis macro-objective aims to map the

enterprise's technological current state from both internal and external point of view. This makes it possible to identify

technological innovation needs connected to the customer

needs and overcome competition, besides creating strategies

that maximize company strengths to take opportunities and

minimize or eliminate internal weaknesses and possible

threats from external environment.

4.1.1. Analyze the organization and its competitive


The analysis of the organization's internal environment

mainly involves an analysis of the company's technological

development and management practices. This step is

considered to be extremely important as it shows up

enterprise's strengths and weaknesses, and its technological

capabilities and vulnerabilities (DRUMOND, 2005).

The external competitive environment analysis, in turn,

mainly involves the competitors, suppliers, customers and

possible substitute technologies. From the analysis of this

environment it is possible to map the pressure that each

of these players exert over the organization, and also to

identify the internal strengths and weaknesses, and external

technological opportunities and threats (MANUAL DE

OSLO, 2008; DRUMOND, 2005). The SWOT and Industry (Porter's 5 forces) analysis are

both tools widely applied in CI that meet the needs above

discussed. As from the literature, these tools are told to

be complementary, hence, for the intent of the analytical

model here proposed, they present this same connotation

(FLEISHER; BENSOUSSAN, 2003). SWOT technique

helps out, by definition, the decision-making managers

to check and to provide plans and actions to deal with the

main strong and weak internal aspects of the organization

and the external opportunities and threats to the company's

business (FLEISHER; BENSOUSSAN, 2003) and the

Porter's 5 forces analysis provides information about the

company's competitive environment, analyzing its potential

of profitability through the power of bargain of clients and

suppliers, rivalry between the competitors and threat of

new incoming and substitute technologies and products


4.1.2. Identify customers' needs

This is considered to be one of the primary points for the

identification of innovation opportunities once customers

constitute a key reason for any company's existence. Their

needs must be taken into account in the new technologies

identification process in order that the company may

meet them and make the innovation process less risky

as a new product launches (MANUAL DE OSLO, 2008;

DRUMOND, 2005).

Among the existing analytical tools with the purpose of

capturing the customers' needs, the market research (CALOF

Macro-objective 2 - technological knowledge

Regarding the incorporation of new technologies it is

necessary to know every existing technological tendencies

and technologies worldwide. It is also extremely important

to any organization to detain the technical knowledge of

its own technologies, which can be constantly improved.

Therefore, it is necessary a constant technological

monitoring to identify opportunities and/or threats from

the outside environment (MANUAL DE OSLO, 2008;

DRUMOND, 2005).

For the purpose of gathering technological information

the patent analysis is one of the most important and complete

sources and, for that reason, it was selected for this analytical

model (ASHTON; KLAVANS, 1997). Estimative shows

that 70% of the information reported in patents are not

encountered in any other source of information (ASHTON;

KLAVANS, 1997). Apart from that, the patents contain

information about products and processes not yet produced

or implanted, what permits that technological trends are

traced. Hence, the patent analysis provides semi-quantitative

indicators and qualitative insights on technological

development history, current status and future trends and

challenges, which can be helpful when identifying possible

opportunities of innovations and new product and process

technologies (ASHTON; KLAVANS, 1997; TRZESNIAK,


4.3. Macro-objective 3 - strategic correlations between

innovation needs and available technologies

This macro-objective has the purpose of correlating the

customer's technological needs to the existing technologies

and technological development capabilities of the enterprise

itself (DRUMOND, 2005). It sets up the ending of the

process of identification of innovation opportunities turned into the customers' needs and it is especially important to

support the decisions on which incremental or completely

new innovations might be fully implemented. The Figure 2

At first glance, some business areas seem to be hidden in 3M's definition where innovationcan take place. Sloane (2003: 8) describes these

types of innovation

within business strategyand business processes in a more elaborate way:

"Innovation is not just releasing new products. It also encompassesimplementing new business processes, fresh ways of doing things, radical alliances, brilliant new routes to markets and business strategies." 

Innovation needs time and is based on trial and error. The development of a breakthrough product isn't something you can do on the fly. It is the result of individual and corporatefeatures coming together at a certain point of time. These are the

elements of innovation

, thisterm paper will look at.Thus, innovation can be summarized as the business process of inventing, developing, puttingnew concepts into practice and gaining benefit of new products, new services, new processes,or further revolutionary business elements.

The term 'innovation' is defined by 3M (Gundling 2000: 23) as follows:

"New ideas + action or implementation which results in an improvement, gain, or profit."

Innovation is

known as a critical factor for companies to create value and sustain competitive advantage in today's highly complex

and dynamic environment (Ranjit, 2004). Companies with accepting the innovation, in response to environmental shows a schematic representation of the analytical model

proposed. The correlations between analytical tools

constitute the great differential of the model, once, solely,

those tools do already exist and are frequently applied.

Another differential introduced is the application of

QFD as a key strategic analytical tool of CI. It is important

to mention that besides the fact that all the analytical tools

solely contribute with relevant information, they also

provide information from the interactions between them,

which enriches the decision making process. The main

planned correlations with the purpose of identifying

opportunities of technological innovation present in this

model are as follows:

• QFD & Patents: The QFD technique can be very

useful when applied together with the patent analysis,

because the customers' needs identified and turned into

technical requirements can provide strategic direction

for the refined searching of patents and related technical solutions that fit the primary needs evaluated.

• Porter's 5 forces, patents, QFD, QFD-patents

& SWOT: To complete and provide a synthesis of

the main findings the analytical process, the SWOT

technique was inserted in the model as a meeting

point of all other analyses. The primary objective of

this synthesis is to have the main findings deployed in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding. in four distinct dimensions: strengths, weaknesses,

opportunities and threats. By doing so, the processes

of communicating those finding and the developing

recommendations to the decision makers gets even

more structured, logic and of easy understanding.

changes and develop new capabilities that will help them to achieve higher performance will be more successful

(Montes et al, 2004). Innovation is a mental process that leads to the creation of a new phenomenon; this

phenomenon may be a new material or spiritual product, (the new service or new techniques). In fact, innovation is

analysis or combination of some concepts and creating new thinking and concept that was not previously available

(John Kao, 2001). Many organizations, whether public or private use their competitive intelligence services for

acknowledging decision makers. Competitive intelligence is process of control the competitive environment with

the aim of providing useful information from competitors (Bose, 2008). Competitive intelligence is a necessary

concept in the management process and strategic planning of company. Companies with using competitive

intelligence and analysis of competitor's strengths and weaknesses are able to predict opportunities of market

development and having better performance rather than competitors (Britt, 2006) Development of information

technology and its applications in recent years has contributed to competitive intelligence, so that with the explosion

of information that are available through blogs, email and other electronic communications, competitive intelligence

is more significant (Wright & Calof, 2006).

Social thinkers and management professors express that if a production company wants to be successful in today's

competitive market should be able to react to threats and opportunities quickly and be able to offer new and

innovative products to market in a short time. There is only one way to achieve this goal and that is innovation. Its

importance since appears that the increasing technological change in recent decades have given (Homayoonfar,

2008). Considering that one factors of innovation for companies is competitive intelligence,

CI and Innovation

Competitive intelligence cycle that is used, includes planning, collection, analysis, publication and evaluation, can

be effective on creating innovation in organizations. Studies of Michak Lysin (Michaklisin, 1996), show,

organizations which have developed systems for monitoring the activities of their competitors are better able to

create competitive advantage through innovation. Pierce et al study (Piercy et al, 1998), also states, that

organizations which have intelligent employees are able to make competitive advantage through innovation better

than others. This advantage leads to higher quality, lower costs in business process and improves general vision and

creates the innovation. Improvement of vision through the use of appropriate information causes facilitation in the process of organizational innovation, which has a positive relationship with competitive advantage and helps to

improve business planning and making decision (Zangoueinezhad & Moshabaki, 2009). Competitive intelligence is

a strategic tool that allows senior management to improve organization's competitive advantage by focusing on the

external environment, forecasting future market direction and innovation [12]. This paper provides a conceptual

model to evaluate the impact of competitive intelligence on innovation. Innovation in product, process, service and

fundamental innovation that are used in this model are more useful in cases of research. The proposed model is

shown in Figure 2.

Innovation can be applied in five separate ways,from very focus concern

to a wider one.

1 -Technology, competence, development, products, markets

key role of patents patents(themostly use in clusters) clusters)

2 - Looking for new attitudes: allservices of a company (or a cluster)

should be involved in information analysis(R&D, marketing,HR, …)

3 ‐ Looking for new ideas near your customers,they must be involved

4 - Looking for new ideas: bypassing the customer, groups,NGO, …

5 - B iypassng allthe above : crowd isourcng

How best knowledge can help in addressing the need?: Knowledge Management

KM allows an organization to acquire, organize and communicate both tacit and explicit knowledge of employees in a systematic manner to improve productivity and effectiveness. In other words, knowledge management is a comprehensive way of systematically help create and pass the right knowledge to the right people at the right time to create value.

Knowledge management would most likely take the form of an "initiative," "project," or process of adjunct status that produces "value added." To the knowledge organization, creating and leveraging knowledge is a core source of value, a form of competitive advantage, a core driver of its business, and a mission-critical activity permeating almost every aspect of the organization.

Understanding knowledge management, however, is less confusing when we understand that the multiple definitions are relative to the context in which they are used, most notably the disciplinary influences of the people implementing knowledge management and the organizations in which it is implemented. Thus, it is only logical that people with accounting or finance backgrounds think of knowledge management in terms of "intellectual capital," focusing on aims of maximizing a company's revenues by fully leveraging the collective know-how (intellectual capital) of its people.

The management leadership plays a crucial role in influencing the sharing and application of knowledge. In an organization, the leader plays an important part by being role model to exemplify the desired behavior for the propagation and use of KM. They should show a readiness to share their knowledge freely with others in the organization, to continuously learn and to motivate the employees to generate new knowledge and ideas.

Creating and using knowledge in an organization is a daunting challenge the role of seeing a company through myriad of changes, ranging from market changes and growth to layoffs and mergers. In order to maintain one's performance, an organization needs to be flexible. They should also be aware of the messages their vision and strategies does about the utilisation of organisational knowledge, especially in times of upheaval.

Successful KM will lead to developing a grass root desire among employees to make use of their company's intellectual resources to withstand the pressure of external changes in the environment.


Innovation is process of obtaining idea from various sources, both internal and external, and converting the ideas to products, services and new methods of operation. Innovation can create the ability of change or adapt.

Homayoonfar (2008) stated that innovation is an inevitable necessity because it provides better products and services through either improved models for business or more efficient production processes.

Hadizadeh & Rahimi, 2005 have stated that from the perspective of organization, the application innovation can be divided as follows:

• Fundamental innovation: This innovation leads to creation of new markets.

• Performance development innovation or new product development: When there is innovation in products, companies are trying to increase the use of this new product.

• Innovation of review of manufacturing technology: It involves review of manufacturing technology by requiring taking materials or equipment from their suppliers to produce each new product.

• Innovation in the name, advertising and product labels: Innovation in product labeling and advertisement, causes the tendency to buy a certain product. Research shows about 24% of sales is related to advertisements.

• Innovation in the manufacturing process: Innovation in the manufacturing process through speeding up of production processes and increased production flexibility causes the company to gain key advantages over competitors.

In an organization, innovation is an interactive learning method concerning the creation, acceptance, execution and absorption of new knowledge, thoughts and practices both internally and externally. The results of innovation based learning thus generate the knowledge skill desired for firms to choose, obtain, preserve, improve, adapt and expand competitive capabilities. Such knowledge and competitive capabilities further enable the firms to better comprehend, evaluate and exploit the external knowledge. Chesbrough ( 2006, 2003) have touched upon the more recent theories of open innovation to elaborate on the application of both internal and external ideas and routes to market, which increases the number of likely innovations and the different ways that firms can profit from these innovations. Finally, Edquist, 2005 stated that the systems of innovation theories maintain that innovation is very rarely made merely on the basis of resources available within a firm, but are developed within a framework of competitors, customers, suppliers, , institutions, government policies, value based system that shape the innovation activities.

Tidd, 1997 stated that the continuously increasing pressure of competition and global markets is putting pressure on the organizations to become more innovative, in order to be competitive. Tidd et al. (1997) points out that: "those [organizations] which use innovation to differentiate their products are on average twice as profitable as other organizations".

There are mainly three broad categories of innovation identified in the literature:

Strategic innovative management to help the organization to face the challenges posed by its environment (e.g. Pitt, 1998)

Management of innovative initiatives (e.g. Davenport et al., 1996)

Innovation through knowledge creation and application (e.g. Demerest, 1997).

Tush-man et al. (1997) stated that within each of these categories, innovation can be ranked from incremental to breakthrough.

Research on innovation done in previous decades has demonstrated that innovation plays a significant part in ensuring the long-term survival of organizations (Ancona and Caldwell, 1987), improving organizational success (Higgins, 1995) and sustaining its competitive advantage (Porter, 1990).

Vega-Jurado et al., 2009; Amara and Landry, 2005 , Hippel (1988); Block and Keller (2009) state that by using a wide range of sources of knowledge, firms generally learn, innovate and succeed in a complex environment.

Caloghirou et al., 2004 stated that a firm having innovation capabilities and openness towards knowledge sharing are significant for enhancing innovation performance.

The function of external sources of knowledge for innovation has been more and more highlighted in the analysis of innovative behavior. Cohen & Levinthal (1990), Leonard-Barton (1995) and Grant (1996) have stated that the external sourcing of knowledge for innovation have also been significantly pinpointed in theories of organizational learning in knowledge-based firms. Chesbrough (2006) have dealt with the emerging theories of open innovation. Grant (1996) and Verona (1999) affirmed that the implications of these approaches is that innovation depends on the leveraging of organizational competencies and resources- both those that have been accumulated by internal functional units and those that can be sourced through interaction with other organizations such as research institutions, universities and the like or stakeholders such as customers, suppliers. Nelson and Winter (1982) touched upon the evolutionary theory to suggest that varied sources of information allow firms to create new procedures and practices through combinations of knowledge and technologies, leading to more and more opportunities to vigorously innovate.

((((As per Cohen and Levinthal (1990); Dodgson (1993); Hitt et al(2000), As per Hamel and Prahalad (1994), Cohen and Levinthal, 1990))))


Knowledge management (KM) is increasingly recognized within firms as a critical approach that can be leveraged to attain competitive advantage and superior performance. Concurrently with the developments in the field of innovation, there is the hegemony of knowledge management as a key element in improving organizational competitiveness (Hedlund, 1994). Knowledge management includes new knowledge construction, knowledge embodiment, knowledge dissemination and knowledge use/benefit (Demer-est, 1997). Quintas et al. (1997) state `Knowledge management is the process of critically managing knowledge to meet existing needs, to... exploit existing knowledge...and to develop new opportunities'. These definitions indicate that knowledge management has the potential to be a catalyst for innovation within organizations.

McCartney (1998) states that the activities that give rise to innovation are basically the management of knowledge flows'. Organizations no longer need to guard `scientific' knowledge in the apex of pyramidal structures but instead can form learning networks which span geographic location and organizational boundaries. Drath and Paulus (1994) describe such structures as `proactive learning networks'. Instead of a `them and us' approach, a `collegiate' pattern develops (Peters, 1992). Boot et al. (1994) view this approach as leading to `more agility and responsiveness to innovation'. This agility will become increasingly important as markets become increasingly fragmented (i.e. niche rather than segment driven) and organizations are forced to have `ceaseless innovation' (Demerest, 1997).

Innovation is not a `one act drama...but an ongoing process' (Nonaka and Takeuchi, 1995). Innovative organizational structure alone is not sufficient for the embodiment of new knowledge. There must be concurrent innovative developments within the role of the organization's people. Peters (1992) states that employees should be considered as `brokers of knowledge' rather than simply as task orientated. Zuboff (1988)describes such employees as `knowledge workers'.

If these knowledge workers are to thrive and progress the process of innovation by embodying new knowledge within the organization, then the culture of the organization must be addressed. 3M consider the tacit knowledge culture to be essential for innovation (Brand, 1998). Handy (1989) states that the organization must become `open' and receptive to knowledge workers ideas rather than closed. Pitt (1998) states the need for openness and freedom to encourage group interaction and sharing. Millar (1998) describes this as `openmindedness' in which a blame-free experimental approach can be accepted and adopted. In this innovative environment mistakes must be tolerated (Brand, 1998). The culture is one of `openness, learning and collaboration'. Knowledge workers also increase innovation by turning tacit knowledge into explicit knowledge and by passing tacit knowledge onto others (Nonaka and Takeuchi, 1995; Hedlund, 1994).

Wetlaufer (1999) sees this process as involving endless small-group discussions between employees in an open and conducive environment. Brand (1998) considers that this `willingness to share' must `permeate the entire fibre of the organistion'. The chief executive of Ford (Wetlaufer, 1999) describes the process as `telling stories' about experiences. Madhaven (1998) states that teams involves in embodying this new knowledge must develop and use new mental models which support innovation. To encourage this process of knowledge embodiment some organizations encourage job rotation and send employees to work in different parts of the organization. Also, some organizations (e.g. 3M and Caterpillar) set aside speci®ed time periods each week where employees can develop their own innovative ideas in small teams).

In summary, knowledge embodiment can build on new knowledge construction and enable the process of innovation to be further incorporated within the organization.

Knowledge dissemination and innovation Innovation includes not only the construction and embodiment of new knowledge, but also the dissemination (Figure 1) of proven new knowledge across the organization and its environs (including customers and suppliers) (Demerest, 1997). Only through this dissemination process can Polanyi's (1962) observation (see above) be addressed. Peters (1992) emphasizes the role of organizational structure in disseminating new knowledge which leads to innovation. He sees learning networks or spider's web' type structures as being able to rapidly spread new knowledge which will lead to increased knowledge embodiment in the form of new products and services throughout the organization.

Knowledge dissemination should not be adhoc but, as pointed by Pitt (1998), `exemplar organizations are systematic at making intuitive experiential knowledge explicit and in diffusing it more widely in the enterprise'. Gurteen (1998) sees this happening through dynamic interaction among learning networks (Robertson et al., 1996) which are free from the encumbrances of functional hierarchies. Roberts et al. (1998) point out that it should not be assumed that knowledge flows from the corporate centre but may now be based in the `peripheries of the organization. Thus, innovation is no longer the domain of senior management but can arise anywhere and at any level in the organization. Nonaka and Takeuchi (1995) see this new knowledge dissemination as leading to `innovation that is systematic and continuous'. Knowledge workers have a key role in achieving increased innovation through knowledge dissemination. Acting in cross-geographical boundaries these knowledge workers can `sift and refine and implement' (Gurteen, 1998) ideas from across the organization. Sometimes this process is achieved by moving members from successful past teams into new teams in other areas, by job rotation and by using experienced mentors for teams (Madhaven, 1998). As interaction with customers and suppliers increase, the knowledge worker will disseminate and embody new knowledge far beyond the organizational boundaries, leading to increased innovative partnerships and alliances (Nonaka and Takeuchi, 1995).

If organizations are to systematically disseminate new knowledge to achieve increased innovation, as suggested by Pitt (1998), the key processes will need to be identified throughout the organization, its customers and suppliers (Davenport et al.,1996). These common processes will act as rapid carrier vehicles for the increased dissemination of new knowledge. For example, Nonaka and Takeuchi (1995) single out the new product development process as entraining and disseminating new knowledge in all areas of the organization.

McCartney (1998) states that these process are essential for the `management of knowledge flow or dissemination throughout the organization.

Thus, if organizations are to effectively deploy innovation they must ensure that new knowledge, which has been effectively embodied, must also be disseminated throughout the organization if a process of `ceaseless innovation' (Nonaka and

Takeuchi, 1995) is to become effective. Knowledge use/benefit and innovation

Organizations which are noted for being innovative usually have an effective knowledge management system (i.e. construction, embodiment and dissemination of knowledge). For example, 3M's key mission is to become the most innovative company in the world and it sees effective knowledge management as the way to achieve this goal. 3M requires each one of its businesses to have at least 30% of its sales from products not in the line four years ago (Brand, 1998). The organisation is a good example of organisation's which, in the words of Nonaka and Takeuchi (1995), `ceaselessly innovate'. These characteristics are increasingly important in organizations as traditional predictable markets become ever more fragmented and volatile. To `thrive on chaos' (Peters, 1992), organizations must ceaselessly innovate or decline.

Also, with innovation resulting from effective knowledge management there is an opportunity to `square the circle' of business benefit and employee emancipation. The business benefits of increased growth through innovative new products and services can be paralleled with concurrent increases in employee creativity and

empowerment (e.g. Caterpillar allow employees to spend 10% of their time developing their own ideas in small teams).

Gooijer (2000) defined knowledge management as "those actions which support collaboration and integration".

Yahya and Goh (2002) described KM as "…a process of leveraging of knowledge as the means of achieving innovation in process and products/service, effective decision making, and organizational adaptation to the market" (pg. 458). Tasmin and Woods (2007) defined KM as "a socio-technological based system that supports collaboration and integration among interlocking organizational functions to create more innovative and value-added products and services for the market" (pg. 63). Knowledge management practitioners and researchers alike support the view that KM requires the integration between the IT systems and people who run the firm as means to attain innovation.

Carneiro (2000) proposed a conceptual model that links between KM, innovation, and competitiveness. The perceived link between knowledge management and innovation has been widely discussed by scholars and practitioners in KM literature (Uden, L., Kekale, T. and Naaranoja, M., 2007; Darroch, 2005; Darroch and McNaughton, 2002; Brand, 1998; Ruggles and Little, 1997).

Abraham (2008) stressed that the major intention of KM is innovation.

The simple definition of innovation is invention that is commercially viable. There is novelty factor. Also, the return on selling that innovative product should generate more than the cost incurred on producing it. That would be commercially viable aspect. In Indian firms, there is no separate innovation department in organisations. The knowledge management system would typically be under information or quality department. The knowledge management system (KMS) is used for standardization of operations for increasing the reuse of knowledge. In many firms, the KMS is still stuck to production, not driving for innovation.


Toyota had an impressive 46% share in Japan's domestic market and 16% US market as of 2009. Toyota was ranked 3rd in the survey conducted for ranking of 10 most innovative companies after Apple and Google. To face the competition from US European and Asian market, it differentiates itself in the crowd by innovation through investment in R&D, solving consumer driving issues (safety and environment), pioneering hybrid technology development. Its innovation strategy involves:

Closed system


Highly collaboration

All employees are encouraged to offer ideas

Approximately 1 million ideas are generated annually.

In 2009, Toyota spent nearly 4.4% of its revenue in R &D. It has 3 level strategy is under:




- Vehicle related technologies

Enhanced efficiency

Tehcnological breakthrough

Hybrid technology

Fuel Cells

Product Development

Upgrades on current models

The Toyota Way

Focus on flow

Each process must add value

Interruptions eliminated

Toyota's Production System focuses on Just in time, Kaizen, Jidoka.

Standardisation (Different models, same production line)

Heijunka way (Same production procedures for different models of cars)

Managing change

First mover advantage like in case of hybrid cars (Prius)

Uses Japanese market as test for new products before rollout in European and US markets.

Just in Time protects Toyota in times of uncertainty. If order numbers are low, only a few cars are purchased. It limits exposure to failure.

Challenges for Toyota

-Massive worldwide recall

- Approximately 8 million cars affected

Innovation seems to be the only solution to be on cutting edge.

Capturing Value from Innovation

Using cost reduction to enhance efficiency and high quality produced through TPS helped in driving the market share. Patents are filed to protect valuable intellectual property. For example, 2000 patents were for 2010 Prius.

Suggestion: Think local ,act global from development to implementation

Offensive innovator: Long term sustainable business rather than short time profits

Sharing is Winning - collaboration with academic institutions, suppliers

KM should not be looked in isolation. It should be proactive within the organisation.

How best organizations respond to Change: Organisational Leadership

Researchers have highlighted the importance of organizational leadership as one of the goals of the firms.

Change is about the survival of the fittest. Change is particularly necessary in organizations that wish to prosper in an uncertain, complex and volatile environment. The changes impacting an organisation's external environment are not transitory. So, the organizations cannot change at a slow and uncertain pace. Bolman & Deal, 1991 state that powerful forces in the environment are pressurizing organizations to alter permanently the way they work.

When the change happens, the sys