ST4S39-V1 STRATEGIC SYSTEMS THINKING- ASSIGNMENT 2

ST4S39-V1 STRATEGIC SYSTEMS THINKING Assignment: Summative Essay assignment 2 Task: “Before we measure something we must ask whether we understand what it is we are trying to measure.” (Gray et al, 2015). Task: “Critically discuss the above statement in relation to effectively developing the YOUR organization” Student : Evance Baron Mtikama Enrollment Number : 74107227 Studying : MBA Tutor : Christodoulos Kakouris. Date of Submission : 22nd February, 2019. strategic knowledge base in TABLE OF CONTENTS Introduction……………………………………………………………………………....3 Knowledge Management…………………………………………………………….....3 Tacit and Explicit Knowledge development ...................................................... 4 Intellectual Capital ................................................................................................ 6 Categories of Intellectual Capital…………………………………………………...7 Reasons of measuring Intellectual Capital ....................................................... 8 Communities of Practice ...................................................................................... 8 Performance Measurement ................................................................................ 11 Key performance indicators and other measurement indicators .................... 11 Challenges of Performance Measurement ..................................................... 13 Conclusion ......................................................................................................... 13 Reference List .................................................................................................... 14 Introduction This paper critically appraises the statement by Gray, et al. (2015), which states that, “Before we measure something we must ask whether we understand what it is we are trying to measure” The objective of the appraisal is to evaluate with evidence, the validity and relevance of the statement made by Gray, et al. (2015). In addition, the paper also critically evaluate if below appraised areas can assist, Management Sciences for Health to effectively develop strategic knowledge base, in line with statement by Gray, et al. (2015). Knowledge base is the integral part of knowledge management that enhances information collection, organization and retrieval for organization and general public at large. The topical areas that can assist Management Sciences for health to develop knowledge base that have been appraised in this paper are as follows: Knowledge Management, Communities of Practice, Intellectual Capital and Social Networks; and Performance Measurement and its challenges. Peer reviewed journals were analyzed on the subject matter. In addition, Management Sciences for Health literate and policy documents were reviewed to obtain evidence. Interviews and observation was also used in getting data for analysis. The findings were also critically evaluated. Knowledge Management Knowledge management is “formal directed process of determining what information the company has and that can benefit others in the company and devise ways how they can make it easily available and accessible by employees” Smith, (2001) quoting Liss, (1999). According to Wilson (2002), knowledge is important asset which is located in individual’s mind which cannot be managed, whereas information flows can be managed. Knowledge is created through the interaction of agents in knowledge networks, Tur and Azagra-Caro (2018). There are two types of knowledge within knowledge management and business which are Tacit and Explicit, Fuchs, (2001) quoting Polanyi, (1967) and Hauptman and Neuringer, (1997) quoting Nonaka and Takeuchi (1995). However Choo (2006) came up with three types of knowledge as follows: Cultural, Tacit and Explicit. I will therefore explore tacit and explicit knowledge which many researchers agreed. Tacit knowledge is described as knowledge that is obtained through experience and practice and is difficult to communicate whilst explicit knowledge is more formal whereby it is codified in writing and simple to communicate, Brohm (2006). Tacit knowledge is hard to be estimated however it can be observed as unconscious knowledge on one side whilst explicit knowledge is coded and structured knowledge on the other side, Leonard and Sensiper, 1998. In daily life activities, there are essences of tacit like personal skills, and intuition. These are grouped into two scopes, cognitive and technical dimension. The technical component consists of expertise and information in the area of “know-how” whilst the cognitive component consists of beliefs, values and mental, Nonaka and Konno, (1998). Everyone can get explicit knowledge but you cannot easily get tacit knowledge and this differentiates all, Lawson and Lorenzi, (1999). According to Brockmann and Anthony, (1998), stated that tacit knowledge is very important for it assists in improving accuracy of task performance. In addition, Switzer (2008) distinguished that accomplishment of any organization, commensurate with how effectively it manages the explicit and tacit knowledge. Brown and Duguid, (1998) stated that explicit knowledge without augmentation of tacit knowledge can be unusable. The challenge with tacit knowledge is that it is difficult to be trained or teach somebody, Brockmann and Anthony, (1998) however, Simon (1991) stated that Organizations learn by either through new members who brings new knowledge or through learning of their members. There must be deliberate effort by organizations to transfer knowledge and expertise from experts to beginners who need to know, Hinds et al. (2001). According to Dave and Koskela (2009) emphasized that knowledge cannot be transferred across the organization for reuse in future projects but it will remain in the minds of project team members. This was agreed by Bhatt, (2002), who argued that organizational knowledge is not just a simple sum of the individual knowledge which is supporting research of Dave and Koskela (2009). Much as knowledge cannot be transferred across the organization, Dave and Koskela (2009), Organizations are encouraged to codify knowledge of workers so that institutions may take advantage of it to be a competitive advantage for the organization and also as part of knowledge transfer, Sullivan (1999) and Sharkie (2003). The other challenge is that tacit knowledge is viewed that it can be achieved through personal experience Polanyi, (1958) however if this is true diffusion of tacit knowledge seems impossible, Augier and Thanning, (1999). Researchers have agreed on one point that it is difficult to share tacit knowledge, Holthouse, (1998); Nonaka and Konno, (1998); Leonard and Sensiper, (1998). The sharing of knowledge could be possible if organizations develop and cultivate an environment of knowledge sharing, transformation, and integration between their members, Nonaka and Takeuchi, (1995). This environment of knowledge is necessitated by culture and technologies that helps organizations to work with complex situations as long as there is proper coordination, Hutchins, (1991). In addition there must be willingness to share knowledge and also knowledge sharing culture within the organization which is supported by management, Lin (2007). This idea is also support by Smedlund, (2008) that sharing of knowledge and information in organizations are done through social network structure and other opportunities such as motivation, organizational culture , type of knowledge, trust, place and time, Ipe, (2003). Mutual understanding, trust and familiarity in their cultural and social contexts are important factors for tacit knowledge transfer, Roberts, (2000). Management Sciences for Health has informal Technical Exchange Networks whereby staff members are free to interact on the issues of their concern whether on problems and challenges encountered in the course of their work, Campbell, (2013). The practice by Management Sciences for Health is in line with knowledge management theory whereby through interaction of staff on networks, knowledge is created, Tur and Azagra-Caro (2018). In addition, documents developed by employees of Management Sciences for Health are saved on line, MSH New records retention policy, (2018). This is also in line with the theory for new records are retained for future use by any who may want them and this is explicit knowledge that could be obtained from the records which is codified, Leonard and Sensiper, (1998). Management Sciences for Health highly values lessons learned for it is treated as tacit insights. After collection of lessons learned are made available to inform future interventions, Echevarría and Mouanga, (2017). This practice is in line with knowledge management for lessons learned are part of knowledge creation, Rezqui, et al. (2010). The knowledge discussed above is associated with human capital one of intellectual capital which is tangible. Intellectual Capital and Social Networks Intellectual capital is referred to knowledge and knowing competence of a social group such as professional practice, intellectual community and organization, Nahapiet and Ghoshal, (1998) which benefits businesses by positively influencing organization performance, Baxter & Matear, (2004). Intellectual capital is regarded as a drive in competitiveness and performance of organizations, Sharkie, (2003). Knowledge Management and Intellectual Capital was conceptualized within framework of profit making organizations, however the paradigm shifted to not for profit organizations such as public and academic sectors Ramírez and Gordillo, (2014), Kong and Prior, (2008). In Intellectual capital are three categories as follows: Human capital whereby skills, training and education of employees is in their mind such as skills, know-how, knowledge, competences, capabilities and experiences, Sullivan, (1999). The second category of intellectual capital is external/ relational/ customer capital: This comprises relationships with suppliers and customers, brand names, reputation, trademarks. The third category is internal/ structural/ organizational capital which is embedded in organizational processes and structures such as culture, processes, intellectual property, databases, information systems, policies, Martin de Castro et al. (2011). According to Sullivan (1999) there are two main categories of Intellectual Capital: the human capital comprising the employees’ skills and competences and intellectual assets such as patent and trademarks. Ramírez, et al. (2011) further stated that Intellectual Capital includes organization`s non-tangible assets such as patents, processes, talents and skills. Intellectual capital disclosures are done by social media networks whether voluntary or involuntary, Dumay and Guthrie, (2017). Intellectual Capital is used as market-based information which analyses market data for easy understanding between market capitalization and Intellectual Capital disclosures, Maditinos et al. (2011). Listed companies disclose in their annual reports Intellectual Capital in its various forms but not treated as part of financial statements, Bruggen et al. (2009. There are internal and external purposes for measuring intellectual capital and this will assist the organization to know the value of the assets and benefits gained. In terms of internal reasons for measuring intellectual capital is that the company can manage its resources prudently and effectively thereby minimizing costs. In addition, intellectual capital may be measured on external purposes in order to provide information to investors on company`s growth Hunter, Webster & Wyatt, (2005). Management Sciences for Health being an international non-governmental organization in health sector, values much its employees as its human capital. Their technical know-how matters most and they are well motivated to avoid high staff turnover which may affect efficiency, O’Neil, M. and Reimann, S. (2010). The organization also let its employees to sign annual code of ethics as one way of ensuring that they abide by them, MSH code of ethics, (2018). This helps to guard reputation of the organization and also to have good relationships with ministry of health officials and community as customer capital, which is one of the categories of intellectual capital, Sullivan, (1999). Both knowledge and human capital are associated because they are developed in communities of practice through interaction of agents in knowledge networks, Tur and Azagra-caro (2018). Communities of Practice Community of practice is defined as a cluster of people who shares their real life problems and interests on specific topic and their regular interaction to learn together, assist them to gain a greater degree of knowledge and expertise on that topic, thereby developing knowledge, Gilley and Kerno, (2010) quoting Wenger et al. (2002). Community of Practice is based on the ideologies of social learning which states that people learn through interacting with others, not in isolation, Estabrooks, (2003). This is done if there is engagement of purpose within communities of practice members, Iverson and McPhee (2008) and without mutual engagement you cannot intensify knowledge development because information exchange is treated casually, Kuhn and Jackson, (2008). Knowledge acquisition to happen there are significant factors such as trust, time and socialization in the work environment, Sandars and Heller, (2006). The challenge with community of practice is to operationalize it in organization settings, Waring and Currie, (2009). This is so because Communities of Practice and knowledge is viewed as a process not an object, Iverson and McPhee, (2002). In order to understand how communities of practice are cultivated, a person should learn the processes that take place in practice, Kuhn and Jackson, (2008). Hutchins, E. (1993) quoting Lave and Wenger (1991), defines communities of practice as interactions that cannot be formed and this gives challenges in managing it since, it has no leadership. Communities of practice contribute to competitive advantage of organizations, Roberts, (2006) which in the end improves performance. The other challenge in managing communities of practice is that it resists supervision, cooptation and interference by an organization due to its informality, Wenger & Snyder, (2000). Furthermore, community of practice completely opposes to organizational hierarchy which is a challenge due to the fact that almost all large organizations are hierarchal in nature, Leavitt, (2003). The other challenge troubling community of practice is inadequate time to engage on activities needed for them to be effective, for community of practice requires more time to develop, Pyrko, et al. (2017). In addition, communities of practice faces challenges in sociocultural environment where it values communities over individuals and this lead to effective communities of practice, Roberts, (2006). This could be noted in Eastern and Western businesses whereby they are totally different due to the fact that they are coming from different sociocultural environment, Castells, (2000). Management Sciences for Health has informal Technical Exchange Networks that has a domain built on trust that inspires the member`s participation and commitment. They are held together by interest and usefulness. They are passionate about the topic of discussion and are willing to share their concerns and problems through interaction. This helps them to deepen their expertise in the area of discussions. Employees join and leave discussions depending on their concern of the topic being discussed, Campbell, (2013). The practice by Management Sciences for Health is the best fit to communities of practice for people learn through interaction with others, Estabrooks, (2003). In addition, there is no leadership but people are built together by interest and passion on the top under discussion which is in line with Leavitt, (2003) argument which stated that communities of practice oppose hierarch. Measuring organization performance, do assist companies to manage their resources prudently and effectively thereby minimizing costs and also assist in calculating company`s growth, Hunter, Webster & Wyatt, (2005). If there is no good performance measurement, it is likely that organizations will fall into common traps whereby even though many activities are implemented, less measurable results will be achieved, Kalkan, et al. (2014). Performance Measurement Performance measurement is defined as “evaluating how well organizations are managed and the value they deliver for customers and other stakeholders” Moullin (2007) this is different from the definition of Neely, et al. (2002), which only focused on quantification of the past actions, in relation to efficiency and effectiveness. Performance Measurement was developed from accounting related to more broad information containing both financial and non-financial information, Ittner et al. (2003). Performance measurement is very important management tool that help to define success and in both functional and organizational performance, Neely, et al. (2000). Performance measurement assists the managers to learn and get feedback on the interventions done if they were effective, Liebowitz, (2004). This does happen because performance measurement has processes, areas of performance and mechanisms in their system, Susilawati, et al. (2013). However performance measurement should be supported by objectives, missions and policies of the organization, Kaplan and Norton, (2004). Performance measurement and intellectual capital are interlinked due to measurement models that may be used. There are a number of financial measurement models for intellectual capital that include among other things, capital asset pricing model, the discounted cash flow technique, market to book ratio, value chain scoreboard and adjusted present value. These financial techniques measure market value of a company, Halliwell & Gray, (2007). There are also non-financial measures in the name of human capital, balanced score card and value chain scorecard which helps to balance with reports on these assets, Holmen, (2005). Performance measurement looks at a number of key performance indicators as follows: cost effectiveness, Zilberberg and Shorr, (2010), expenses versus budget, Leckman (2014), Employee turnover rate, Tam and Le Khoa, (2013), employee satisfaction, retirement rate, Bloemen,(2011), Knowledge achieved with training, Internal promotions versus external hires, Bidwell, (2011), Salary competitiveness ratio, Jessica et al.(2017). Measurement of knowledge performance work is challenging owing to many intangible performance drivers such as working atmosphere and employee competencies, Amabile, (1998); Davenport, (2008); Drucker, (1999). In addition, complex and intangible nature of service outputs is also a challenge, Lettice et al. (2006); Sherwood, (1994). To measure customer value and service impacts is also a challenge in performance measurement, Davern and Kauffman, (2000), Ratio format type of performance measurement is more preferred, Sink and Tuttle, (1989) due to its capacity for external comparisons with business in the same sector for benchmarking, Kouzmin et al. (1999). However the challenge is that it fails to provide future alertness for it only concentrates on historical performance not present performance, Kaplan and Norton, (1996). Amirkhanyan (2009), stated that lack of funder capacity is an obstacle collaboration in the performance measurement process in non-governmental Organizations. Complexity of organizations problems is also a challenge in performance measurement, Schalock & Bonham, (2003). Networked organizational structure that supports programs in decentralized program poses challenges on performance measurement at the central government level, Frederickson, (2003). Management Sciences for Health, has a number of performance measures to assess performance such as Salary competiveness ratio, Staff turnover rate, Budget analysis, Benchmarking of activities and community score card, MSH Performance measurement report, (2018). This is in line with this theory, for Management Sciences for Health have financial and non-financial performance measures as described above which are supported by, Zilberberg and Shorr, (2010); Leckman (2014); Tam and Le Khoa, (2013); Bloemen,(2011) and Jessica et al.(2017). Conclusion The paper has appraised that the statement by Gray et al, (2015) is important and relevant which stated that we should understand what it is; we want to measure first before the actual measurement. One such area is measurement in strategic knowledge management, especially intellectual capital measurement which is difficult if you do not understand what it is you want to measure. 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