Complex And Dynamic Environment In Organisational Fields Commerce Essay

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The complex and dynamic environment organisations find themselves today is making them seek changes that would help them adapt to the dynamic complex environment by constantly monitoring the environment, evaluating its own performance with aim of continuous improvement (Dasgupta and Gupta, 2009). These changes come through Innovation being the prerequisite for knowledge creation and as the result of continuous planning, forecasting, and back-casting which helps organisations to understand, model and formulate the future to their advantage (Presley and Meade, 2002). During the process of forecasting, back-casting and planning, knowledge is shared or transferred between employees of the organisation as Dasgupta and Gupta (2009) argues that the problem solving capabilities of knowledge workers lie in their educational background, professional training, creativity and motivation.

The social relationships of an organisation facilitates and enhances the transfer of knowledge and knowledge management within the human capital and the organisation. Organisations that are able to promote and improve the knowledge of their human capital are in a better position to compete and deal with changes in the dynamic environment they find themselves (Nonaka, 1994). New knowledge begins with an individual and can be transformed (Nonaka, 2007) into Intellectual capital which is used to create value (Rastogi, 2003) or profit for an organisation (Harrison and Sullivan, 2000; Brennan and Connell, 2000). Knowledge management (KM) and Intellectual Capital (IC) requires an organisation to think deeply the conditions and circumstances that determine the success of the organisation's customer value proposition (Rastogi, 2002). This is done with soft system thinking (SST) which was developed as a result of exploring an unconventional way of ascertaining problem situations other than the classic systems-engineering methodology (Checkland and Scholes, 1990).

This essay will critically explore Checkland's quote which states that "...We see in the world many examples of sets of human activities related to each other so they can be viewed as a whole'' (Checkland, 1999, pg. 115) in relation to the way that Soft System Thinking can develop an organisation's Intellectual Capital. The structure of this essay will build abound the concept of Knowledge management (KM), Intellectual Capital (IC) and Social Capital (SC), Communities of Practice (CoP) and Soft System Thinking (SST), exploring the relationship between these concepts, and how SST being used in communities of practice can facilitate the development of social capital and human capital which influences the development of Intellectual capital.

IC and SC

Checland (1999) perception of the set of human activities that is related to each other and viewed as a whole is best described by Presley and Meade (2002) as 'the organisation'. Presley and Meade (2002) delineate 'the organisation' as a pool of activities where people are purposefully engaged and the relationships between these activities. Kogut and Zander (1995) further argued that an organisation is a social community that facilitates the creation and transfer of knowledge. Every organisation is a part of a network or a supply chain, and knowledge is transferred in the network as a result of the social relationships formed directly or indirectly. These social relationships which facilitate knowledge transfer are known as social capital (). This knowledge is shared by exchange of tacit and explicit knowledge through the different human activities outside and within an organisation. (). Any product or services being purchased requires knowledge in the form of explicit knowledge (operation manuals, specifications, reports etc) and tacit knowledge (consultancy services).

Human capital (HC), structural capital (STC), customer capital (CS) and social capital (SC) are the elements that make up the IC of an organisation (Svieby, 1997; Marr and Chatzkel, 2004). Rastogi (2002) argued that an organisations IC is dependent on the supportive interaction and strength of KM, HC and SC as seen in the fig. 1.

Fig. 1 Knowledge Management Nexus (source: Rastogi, 2002)

Analysts of social capital are concerned with the significance of relationships to social action (Baker, 1990; Coleman, 1990; Burt, 1992). Social capital deals with the network of relationships that provides indispensable resources for the conduct of social affairs providing its members with the collectively-owned capital (Bourdieu, 1986). Notwithstanding that SC takes several forms, they all have similar characteristics such as existence of a structure and facilitation of action s of individuals within the structure (Coleman, 1990). Nahapiet and Goshal (1998) argue that even though SC creates value in use as it accomplishes targets that would be unattainable without it, it cannot be traded easily. SC is not a generally beneficial resource as SC useful for certain actions might not be useful for another (Coleman, 1990). Coleman (1988) further argued that SC derived from within and outside an organisation plays a critical role to the development of the human capital. Value creation through knowledge is a collaborative effort based on SC and HC as no single person is a compendium of knowledge (Rastogi, 2002). Mckenzie and Winkelen (2006) argued that organisations invest in social relationships in a bid to extend their knowledge ability efficiently and effectively.

However lack of trust has been a barrier to development of SC (Huggins, 2000) as a high level of trust is required in order to facilitate tacit knowledge sharing (Nonaka, 1991). Zeng and Chen (2003) further argued that fear of knowledge leaking to competitors can inhibit the knowledge flow; perceived power differential can create a climate of insecurity in social relationships which acts as a barrier. Nahapiet and Goshal (1998) argued that SC facilitates the development of IC by facilitating the conditions necessary for knowledge transfer.



Cross et al (2006) argues that in the 1990's organisations focused mainly on capturing and sharing knowledge through internet and use of database to improve performance of critical tasks in the organisation. The knowledge in the database could not be used to solve complex problems as every problem is unique with different approach to resolution. And as a result informal networks like Communities of Practice (CoPs) became critical to knowledge transfer. Wenger (2006) define CoPs as groups of people who share a passion for things they do and learn how to do it better as they interact regularly. He further argued that CoPs are not referred to by the name but as learning networks. CoPs can be improved with tools like social network analysis (Cheuk, 2007). These tools help the CoPs to improve information flow and knowledge re-use, develop ability to key problems or opportunities, drive planned and emergent innovation, nurture value-creating interactions and engage employees through community efforts. A supportive and nurturing environment motivates employees to communicate with each other sharing information and experiences, as Hsu (2006) and Rezgui (2007) argues that it helps employees understand where they fit into the collective dimensions of the workplace.

However CoPs usually involves people from different geographic locations and community leaders are faced with the challenges of having to work through the network to locate members of a potential existing community (Cross et al., 2006).

Knowledge creates value when it is instilled into products and services as the value placed on the product or service is determined by the consumer.LIMITATIONS AND HOWEVERS


Presley and Meade (2002) argued humans do not have the capacity to identify all possible alternatives nor make perfectly rational decisions in complex decision environment because different individuals and constituents will have different perceptions of the situation and different preferable outcomes. Chapman (2002) argued that organisations should employ soft system methodology to view problem situations holistically in order better to account for organisational complexity, deal effectively with problems of organisational improvements and changes. Soft system methodology (SSM) evolved from SST which provides an identity and some structure to an aspect of system thinking needed to solving managerial problems by identifying the correct problem situation in an organised manner (Reisman and Oral, 2005). Presley and Meade (2002) argues that SSM does not define a straight forward method of action but through a process defines, a suitable and improved path of action by using its toolkit (rich picture, root definitions and conceptual models).

The rich picture is one of the tools that evolved from the SSM which is used to generate the thinking process by stimulating communication and the value of producing a rich picture is to show the problem situation thereby providing the foundation for an in-depth analysis of the problem situation (Jacobs, 2004). The rich picture is not simply an isolated brainstorming activity but an aid to analysing the problem situation through ordered thinking and reflection by producing root definitions that expresses the activities and purpose of relevant systems useful in addressing the problem situation (Jacobs, 2004) using the CATWOE (customer, actors, transformation, world-view, owners and environment) mnemonic and conceptual models (Presley and Meade, 2002).

From the SSM, it is evident that SST helps the human capital in an organisation to improve their skills through a process of action research. During this process, tacit and explicit knowledge is being shared and transferred which can be captured and transformed into IC

Talk about the hard system methodology and compare it with SSM

According to Checkland (1991) and Forbes (1995) SSM requires users to improve their skills in applying the methodology; arrive at a description of activities, defining the information required by the activities , measure the performance that can be applied to those activities; and deals with the different perceptions of problems to the activities (cited in Presley and Meade, 2002)

SST focuses on the organisational development, human beings, job satisfaction/output/ and trust, user-specified systems, Autonomy, creativity, democratic and organic/evolution which helps to improve the different elements of IC thereby improving the IC of an organisation. SST acknowledges the dynamic complex environment in which human operate, a plethora of different solutions to problems based on the perception of different individuals rather than one single solution and create an environment that would accommodate the needs of different stake holders (Presley and Meade, 2002), SST facilitates learning and knowledge transfer in the various threads of purposeful activity in the form of discussion and debate.