Posts Tagged ‘Knowledge Organisation’

The Story So Far

The idea that environment initiatives will systematically increase profitability has tremendous appeal. Unfortunately, this popular idea is also unrealistic. To anchor win-win situations as foundations of a company’s environmental strategy is dangerous because environmental costs in most companies are skyrocketing with no economic payback in sight. To achieve truly sustainable environmental solutions, managers must strike a balance between business and environmental concerns, recognising the fact that win-win situations only come few and far in-between.

Evolution of Environment Management

First Era (1970 – 1985)
Companies faced with new regulations of high technical specificity did little more than comply with the regulations and often fought them.

Early Second Era (1985 – late 1980s)
A shift in the regulatory context and the maturing of the environment movement created for managers to look beyond the narrow, predominantly technical approach.

Late Second Era (late 1980s – present)
The emergence of the win-win mind-set is a direct result of the extraordinary success that companies achieved in reducing pollution. Therefore, many jumped to the conclusion that continued environment action could more than pay for itself.

Why win-win won’t work

  • There is little specific guidance to managers. Proponents of the environment movement (e.g. Porter) argued their case on the macro level. What managers really need is specific guidance at the micro level.
  • Win-win situations are not easy and cannot be assumed that they can carry on indefinitely.
  • Win-win situations will become increasingly scarce as environmental challenges become increasingly more complex and expensive.
  • Even without additional regulations, however, progressively tighter standards within current regulations will push corporate environmental spending higher.
  • Distribution inequity of environmental cost among companies. There is a definite risk of the classic ‘free-rider’ problem.
  • The growing array of choices available to managers is only further complicating matters.

The Search for Solutions

Let’s look at the key problems corporations face today in terms of making environmental decisions.

  • Presently, there is a lack of framework for managers to follow.
  • There is a lack of literature that tackles the full range of issues. Present environmental text can only offer a one-dimensional prescription (i.e. effective environmental management) to achieve competitive advantage.
  • Companies do not take environmental issues into their ‘core’ business plans.
  • Other matured organisational functions (e.g. Quality Management, Accounting) have too narrow a focus to be able to encompass the whole range of environmental issues.

The Pragmatic Path – A Value-Based Approach

Instead of focusing on win-win situations, companies would be better off focusing on the ‘trade-off zone’, where environment benefit is weighed judiciously against value destruction. Within this framework, environmental issues can be broken down into three broad categories: strategic, operational and technical.

  1. Strategic issues

Some environmental issues are strategic because their impact on value is high enough to put core elements of the business at risk or to fundamental alter a companies cost structure, and because managers have considerable discretion about how to respond.

  • Decision type – lead or lag
  • Decisions to lead or lag are characterised by the Catch 22 irrationality.
  1. Operational issues

Management’s task with these issues is to ensure that minimum expenditures achieve maximum environment impact.

  • Step One – Understanding the what’s and the why’s of spending.
  • Step Two – Maximise impact with minimum cost.
  1. Technical issues

Systems should be created to track and disseminate emission information to managers so that they can make informed everyday decisions on trade-off between cost and environment.

  • A proactive role with a system in place versus a reactive one when one use an external audit.

Summary

For all environmental issues, shareholder value, rather than compliance, emissions or costs, is the critical unifying metric. The advantages are threefold, they are:

  • Environmentally sound
  • Practical, as it is formed with business experience
  • It is more likely to be truly sustainable over the long run.

The reasons are not only simple, but more importantly, sustainable. In short, as much as each shareholder wants to save the world, each environmental decision must ‘make sense’ for the business first. And as elegant as win-win might sound, in the real world… things are just not as simple.

Note: This paper was presented in a seminar.

Knowing how to build a bicycle does not necessary mean knowing to ride it. Similarly, knowing to how to ride does not mean knowing how to win a race. Obviously, these three activities (building, riding and winning) are three distinct activities, however, all these involves specific knowledge. Knowledge organisations need knowledgeable people to build and run them, and most importantly, have people who know how to win races.

There are six challenges that knowledge organisations face today. To briefly reiterate, these six challenges are:

1) Make Knowledge Productive

This should be the first objective to achieve in any knowledge organisation. The organisation’s function is to put knowledge into work.

2) Become an organisation of equals

One cannot claim that there is such a thing as a ‘superior’ specialty knowledge in an organisation, other than the context of specific situations. Thus, every knowledge worker is an equal and should be treat like one.

3) Enable each specialist to do their part well

In an organisation of knowledge workers who specialises in their field, it is paramount to ensure that the conditions are right for each specialist to do well. Not only does it mean allowing the knowledge worker to work in his area of expertise, but also mean creating or enabling a conducive work environment for each individual in the organisation to flourish.

4) Design for change

The goal for a knowledge organisation is innovation in tools, product and work processes and accumulation of knowledge itself. It is to abandon everything that is established, the traditions, the familiar and the comfortable settings. May it be in products, services, relationships, skills, organisational structure, or even knowledge itself.

5) ‘I’ exists because of ‘We’

The unique among the crowd, the special one. That’s how knowledge workers’ sees themselves – the different one among colleagues, the one that is holds special meaning to the organisation and to himself. He being a part of something bigger, but yet, distinctive different by drawing its identify and definition from the others around him. Without the others, he will lose all of his meaning. ‘I’ exists because of ‘We’.

6) Sharing Knowledge

Knowledge, in its purest form, is meant to be shared. The traditional response in keeping knowledge involves keeping key information secret (to their employees) by maintaining a ‘need-to know basis’ policy. However, possession of knowledge remains secondary, while making innovative use of knowledge is the primary source of competitive advantage. An organisation that promotes open interaction of knowledge encourages many possible uses for one single piece of knowledge. Knowledge is never isolated in its uses; its value will only grow when used with other compatible knowledge. Inevitably, cross-functional cooperation enhances the probability of turning knowledge into successful innovative product and services. Not only can sharing knowledge be a virtue, it can be profitable as well.

Management guru, Charles Handy (1989) once said ‘Intelligent people prefer to agree rather than to obey’. Surely, any intelligent person would agree with this statement.

It became a sign of the times when companies like IBM announced that they allow their employees to go in smart casuals, instead of the customary clown suits (suit and tie). It’s not because they wanted to, but because they needed to. If they don’t, they run the risk of losing their talents to competitors. In this knowledge economy, no company can afford to lose talented employees. Thus, companies have no choice but to let workers have their way.

Trusting your employee to do their job

I personally know of a managing director of smallish firm who still insist on downloading each of his employee’s email to his computer. His response to my somewhat shocked look was ‘I need to know what they are doing’. But if he didn’t trust them, why would he hire them in the first place?! On the other hand, I understand the tension as well; Nick Leeson single-handedly brought the two centuries-old Barings Bank to its knee. And history will certainly repeat itself. But do employers today have a choice? The knowledge worker knows that he/she have the power, and they need an environment that allows them to flourish, which in turn (hopefully) enriches the company that they work for.

With Great Power Comes Great Responsibilities

In Spiderman – The Movie, Peter Parker’s uncle said this to him. Today’s knowledge workers know and understand the power that they hold, but they must understand too that “With Great Power Comes Great Responsibilities”. The firm can put in as much rules and regulations in place to prevent abuse, but end of the day, if this phrase can be ingrained into each employee’s conscience, nothing will go wrong. How? That is another matter altogether.

Bibliography:

Handy, Charles, 1989, ‘The Age Of Unreason’, Business Books Ltd.