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The seminal literature in the area of knowledge management and the key role of managers suggested that the key mission of management is to accumulate and protect knowledge or capability (Rumelt 1984, Barney 1984, Wernerfelt 1984,Teece et al. 1997). Arrow and Hahn (1971) built on this concept by suggesting that "such knowledge or capability defines an organisations capacity to efficiently convert its inputs into valuable outputs", therefore effective managers improve the organisations capacity to produce efficiently by updating or advancing knowledge. Nelson and Winter (1982) defines an organisation's knowledge or capability's as the "input-output combinations achievable with all possible mixes and levels of activities known to the organisation". The literature in the this area suggests that organisation's knowledge can be improved and advanced by building on existing knowledge, absorbing external knowledge available to the organisation or by developing a new knowledge gathering model by identifying "a problem and then discovering a valuable new solution" Nickerson and Zenger (2004). Therefore for an organisation to develop exceptional knowledge and to gain new capabilities, the organisation must identify a "valuable solution and conduct an efficient solution search" Nickerson and Zenger (2004). Nelson and Winter (1982) suggest that mangers can choose problems while identifying knowledge sets or existing technology either within or outside the organisation that are potentially useful in the search for solutions to that problem. In other words help build a change model or strategic problem solving model a concept introduced my McKinsey.
Why are organisational capabilities important? Capabilities are too hard to obtain in the marketplace, are difficult to reproduce, and are market dependent so they have the potential to become a source of sustainable competitive advantage over rivals. Therefore, the knowledge-based view of the organisation is an outgrowth of the resource-based view of the organisation, which argues that knowledge is the key productive resource of the organisation (Kogut and Zander 1992; Grant and Baden-Fuller 1995). The original idea behind the knowledge-based view of the organisation is that "the central competitive dimension of what organisations know how to do is to create and transfer knowledge efficiently within an organizational context" (Kogut and Zander 1992: 384). Nonaka's (1994) seminal work suggested the importance of knowledge transfer and creation inside and outside an organization, he believed that this concept needed significant attention all levels of the organisation and within all levels of the organisation to create knowledge to help identify and create solutions to problems.
Strategic Problem Solving Model:
"Even when an oasis of excellence and innovation is established within an organization being run on traditional management lines, the experience doesn't take root and replicate throughout the organization becauseÂ the setting isn't congenial. The fundamental assumptions, attitudes and values are at odds with those of traditional management" Stephan Denning in this article why does great Knowledge Management programs fail (2010)
Senge (1990) define the learning organisation as a "group of people continually enhancing their capacity to create what they want to create". Fletcher (2000) builds on this concept as an organisation with an ingrained philosophy for anticipating, reacting and responding to change, complexity and uncertainty. Senge (1990) remarks that the rates at which organisation learn may become the only sustainable source of competitive advantage.
reconfirming his concept of enhancing knowledge through learning and adaption, Senge (1995) and cited by Kotter and Cohen, (2002) organisations are facing a rate of change at monumental rate, therefore organisation have now come to view learning as a more critical variable than it might have been in the past. The landscape in which today's organisations must operate is characterised by continual and disruptive change- recession, bank crises and economic bubbles. To remain relevant and competitive, organisations must continuously adapt and transform through the process of learning at all levels of the organisation (Senge, 1995). In order for an organisation to adapt, transform and learn, change must be adapted by all aspects of the organisation and at all levels.
Palmer et al (2006) citing Stewart (1996) suggests that an inspection of an organisation for change must be carried out before identifying a suitable model, this would provide an indication of the likely outcome of the change program and may identify areas to address in order to support the change. Palmer et al (2006) suggest there are six methods for implementing organisation change (figure 1). In the case of the trigger the most suitable strategy suggested by Palmer- is the processual approach, this concept views change as a complex interplay between content, process and context, it recognises there are different interest groups in organisations that have different understanding of goals, time, language and behaviour, all influencing how change occurs. It also recommends that the organisation must examine external factors such the (economic, political and competitive environment) and internal (strategy, structure, culture and power relations). Albert (2005) suggests that organisations can create a key source of competitive advantage, embrace innovation and improve bottom-line results by developing capabilities for knowledge management and becoming a learning organisation. To build on this concept the change literature stresses the importance of top management support and leadership during programs of planned change (Leavitt 1964, Nadler 1988, Beer et al1990, Kotter, 1996, French and Bell 1999, Palmer, Dunford, and Akin 2006). Reaffirming this view of change is McKinsey Seven S model, seen as the seminal model in relation to change. In McKinney book "In Search of Excellence (1992)" a joint project with Tom Peters and Robert Waterman (1980), they introduced the idea of collaboration between all aspects of the organisation to build an effective strategy. The basic premise of the model suggests that the seven internal aspects of the organisation need to align for the organisation to be successful. The 7 S model can be used to evaluate and identify valuable problems and solutions, for example: to examine the effect of planned change within the organisation, the evaluation of the effect a planned alignment of departments or process would have on the organisation and to identify the best strategy to implement these plans. The model suggests seven interdependent factors critical to operations, which can be categorised as either "hard" or "soft" elements:
HardThe position and strategic a actions carried out by the organisation in reposes to the market, these actions include external and internal conditions.
The design of the organisation in relation to tasks, people and division of labour and most important the distribution of authority-e.g. reporting network and relationships between departments.
They viewed this as the formal and informal procedures used to direct the organisation, these included control systems, performance measures and the reward system operated.
Staff-the individual's active in the organisation- their competencies, skills and attitudes.
"the distinctive competencies of the organisation" McKinsey (1982)
The way we do things round here, what does this mean- McKinsey suggest that it related to leadership style, however he suggested that it is dominated by the values and beliefs and norms of the organisation, whether conscious or unconsciously, i.e. dress code, job titles.
McKinsey describes this factor as the fundamental set of values that are widely shared by individuals active in the organisation-vision and mission.
"Hard"- the hard elements are easily identified and defined. Management within the organisation directly influence them through strategy statements, internal hierarchies and reposting levels.
"Soft"- these elements with an organisation can be difficult to describe, they are less tangible and are directly effect by organisational culture. However, they are as important as the hard elements if the organisation is to be successful.
Figure -McKinsey Strategic Problem Solving Model
How to implement this model:
The model its self is based on a theory that an organisation can only perform when these elements are aligned and mutually reinforcing. Therefore the model can be used to identify area that need be realigned to increase performance or maintain alignment during the change process, whether restructuring, remodelling, resizing the model can be used to evaluate and plot how the organisational elements interrelate and therefore ensure that the impact change has on one area of the organisation is taken in to consideration by the others. It is important however to point out that the model is not just restricted to change but can be used to analyse the organisations current position and map proposed future situations, which allows the organisation to calculate gaps and inconsistencies between them.
McKinsey, Peters and Waterman suggested a number of questions to analyse each element based on McKinsey problem solving model (Table 1):
Table - Adapted from McKinsey 7S Evaluation Questions
Figure -Palmers (2006) Organisational ChangeHowever, after identifying the factors needed for the "perfect" organisation, McKinsey, Peters and Waterman concluded that understanding and defining the organisation structure cannot and will not solve the problems within the organisation. The 7-S model only functions as a resource to create harmony among the seven factor especially the "hard" "Ss" such as structure, strategy and systems and the four "soft" "Ss" skills, style and share values or super-ordinate goals, that the 7 S model is a method of identification but a change model such as Kotter eight steps must be adopted to implement organisational change from the ground up.