13 Creating Value by Managing Knowledge

13
Creating Value by
Managing Knowledge
Patrick Callioni
I am enough of an artist to draw freely upon my imagination.
Imagination is more important than knowledge. Knowledge is
limited. Imagination encircles the world. —Albert Einstein
People always know more than they can say and always say more
than they write down. —Dave Snowden
Introduction
The theme for this Chapter originated from the need to
understand how organisations produce value by managing
knowledge. The focus is on managing knowledge about and
within an organisation.
Organisations in the public sector and in the private sector
are being challenged by the volume of data and information they
are required to manage and it is becoming obvious that in the
modern economy value is created by the wise use of data and
information, by managing and exploiting knowledge.
As
discussed elsewhere in this book, there is growing recognition of
the value of knowledge management as a strategic and
organisation design tool (see Chapter 14).
This is not a new phenomenon. As early as 1964, Peter
Drucker wrote,
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Other resources, money or physical equipment, for
instance, do not confer any distinction. What does make a
business distinct and what is its peculiar resource is its
ability to use knowledge of all kinds – from scientific and
technical knowledge to social, economic and managerial
knowledge. It is only in respect to knowledge that a
business can be distinct, can therefore produce something
that has a value in the market place (Drucker 1993).
To date, the application of knowledge management remains
relatively narrow, often confined to the management of records.
Alternatively, it is hijacked by the marketing departments – with
encouragement from external consultants – and implemented in
the shape of customer relationship management systems
(Robinson 2000).
This may be because it is not easy to measure the impacts of
applying knowledge management principles in everyday
management practice. The discussion of measurement issues in
Chapter 11 may help the reader to fill this gap.
Additionally, the apparent failure of knowledge management
to live up to its touted potential may be due to the lack of a
persuasive intellectual model that links knowledge management
to organisation theory and to the practice of management.
This Chapter will deal with this latter issue, seeking to
anchor knowledge management principles to modern
expositions of the theory of organisations and to the practice of
management. It will also suggest means to show how value
created by applying knowledge management principles can be
captured and measured.
The reader will notice that, to avoid needless repetition,
references to the history, development and form of knowledge
management have been kept to a minimum in this Chapter. For
a reader new to knowledge management, it may be helpful to
read Part 1 of this book before venturing into this Chapter.
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Models and metaphors
This Chapter is written on the assumption that no single
theory or paradigm will provide a complete or all-purpose point
of view (Morgan 1998; Fernandez-Armesto 1998; Wilson 1999);
and that metaphors are useful means of dealing with complex
information in a complex field (Morgan 1998; Ramsey 1998).
We will use imagination as a tool for extracting wisdom from
knowledge (see Figure 13.3 and Figure 13.7). This is not an
exercise in inductive or deductive thinking, but an example of
reasoning by analogy (Holyoak and Thagard 1996). Think of this
Chapter as a story that ties together the elements needed to
understand organisations and how they create value from
knowledge.
Starting with the end in mind
There is substantial evidence to support the assumption that
successful change programs in organisations begin by focusing
on the desired result (Schaffer and Thomson 1992).
This empirical evidence is supported by influential
frameworks for thinking and acting, such as Stephen Covey’s
seven habits of highly successful people (1990), or the use of
hypotheses in science, discussed below.
In this Chapter, the reader will be provided with models to
manage knowledge about and within the organisation. The
scholar will be afforded the opportunity to test the assumptions
that underpin the models, thus advancing the collective
understanding of the subject matter.
The discussion will take place within a process model of
organisations developed by the author after an exhaustive
review of the literature. This model will be accompanied by a
discussion of organisational metaphors (following Morgan 1998).
In addition, the reader will be provided with other models
developed by the author: a value creation matrix; models of
knowledge management; and a model of organisational
alignment (based on an approach from Mink et al. 1994).
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Lastly, a model useful for planning and managing an
intervention in an organisation will be suggested. The model is
predicated on knowledge management principles, developed and
applied in the ninth metaphor or image of the organisation (see
below).
The models will be presented sequentially, as the discussion
unfolds, but Figure 13.1 shows how the various models fit
together.
Figure 13.1: a KM model of organisations
The hypothetico-deductive process
The hypothetico-deductive method starts from the
assumption that humans are strangers in the universe, making
guesses about its workings. Sometimes these guesses turn out
to be useful, to work in the real world, and sometimes they do
not. Whatever these guesses are, they are not statements of
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essential truth (Popper 1968).
The method relies on the formulation of an opinion or a view
or a guess that might explain the phenomenon or problem
under examination. That view is informed by “intuition” or
“creative imagination”, a process that is “non-logical, ie outside
logic” (Medawar 1969).
That opinion, view or guess is followed by the formulation of a
hypothesis, which is then exposed to a process of “falsification”,
whereby the capacity of that hypothesis to predict the real world
will be rigorously tested. As Medawar and then Tarnas explain:
If our predictions are borne out (logical, not temporal
predictions) then we are justified in ‘extending a certain
confidence to the hypothesis’ (Peirce again). If not, there
must be something wrong, perhaps so wrong as to oblige
us to abandon our hypothesis altogether (1969, 46).
With Popper the problem of scientific knowledge left by
Hume and Kant was brilliantly explicated. For Popper, as
for the modern mind, man approaches the world as a
stranger – but a stranger who has a thirst for explanation,
and an ability to invent myths, stories, theories, and a
willingness to test these (1993, 436).
It is time to leave the realm of theory for now. Let us start
our journey into the world of organisations. When traversing
difficult territory, it is always safer to get one’s bearings first.
So, let us begin with a brief description of the global context.
Setting the scene part 1: The global context
The global economy is developing beyond the range of
international
governance
structures
(Thurow
1999).
Globalisation is challenging the raison d’être that has supported
nation states over the last couple of centuries. The nature of the
nation-state is changing through economic pressure, while the
emergence of truly global companies is leading to ever-greater
capacity to challenge national governments (Hames and
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Callanan 1997).
Let us accept that it is beyond the scope of this work to
debate whether globalisation is a blight or a boon or merely a
feature of the environment, like the weather (Friedman 1999).
For our purposes it is sufficient to note that we live in a
globalised economy. This may be a cliché, but it is nonetheless
a useful descriptor of the current state of the world,
economically, socially and culturally.
Globalisation is often characterised as an economic
phenomenon, involving the
increasing interaction, or
integration, of national economic systems, especially by means
of international trade and capital flows (Soros 1998). However,
it is not just money that moves freely and quickly across
increasingly porous borders.
As recognised by the European Union charter, people and
cultural values also are increasingly free to move around the
world and to set up home wherever a welcoming environment is
found. Globalisation and modern communication technologies
enable capital, knowledge and culture to be shared around the
world almost simultaneously, with dramatic effects for all of us
(Handy 1995).
The information and data explosion
A concomitant of globalisation is that information and data
are growing at ever accelerating rates. The material presented in
this book focuses on one approach that is emerging as a valid
response to the information and data explosion, knowledge
management.
This Chapter, as observed earlier, serves to link knowledge
management with a broader body of literature and practice.
This is not an exercise in taxonomy. It is an attempt to place
knowledge management in context, to save it from being seen as
yet another management fad.
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Setting the scene part 2: Defining knowledge management
As is evident from the literature and from a quick perusal of the
pages of this book, there is no definitive view of the place
knowledge management occupies in the ontology of knowledge
and in the taxonomy of science. This is true of other emerging
disciplines, such as the study of complexity, for example, and it
is not an inherent shortcoming of the discipline itself.
This state of relative uncertainty is problematic for those who
wish to examine the discipline of knowledge management, just
as the absence of agreed, fixed reference points used to be
problematic for cartographers and for those who used charts to
navigate the seas.
Mercator, a 16th century Flemish geographer, devised a form
of map known as “Mercator's Projection”. In this form of map
the meridians of longitude are shown at right angles to the
parallels of latitude, enabling the navigator to plot the correct
compass bearing for a direct course from one point to another.
Mercator’s map and the development of sophisticated
instruments to determine one’s position in relation to a spinning
planet Earth gave cartographers, geographers and sailors alike
the tools needed to do their respective jobs.
Understanding one’s place in the world gives one both
perspective and the opportunity to understand and to define
one’s relationship with the world.
A pictorial representation may assist the reader in
understanding this author’s perspective.
Figure 13.2 puts
forward a model of knowledge management that builds on the
notions advanced by Boisot (1998). The chief characteristic of
the model is that it assumes a nested relationship connecting
data, information and knowledge, extending to wisdom, as
shown in Figure 13.3.
The model in Figure 13.1 is an application of the model in
Figure 13.3, as wisdom is the process of learning from the
translation of knowledge into action.
Creating Value by adding Knowledge
Figure 13.2: Knowledge management model
Figure 13.3: Model of wisdom
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The reader will soon observe that within these models
knowledge is recorded as either information or data – it is not
recorded as knowledge.
That is because the models are
predicated on the assumption that knowledge is a phenomenon
that occurs in people’s minds and cannot be observed or
recorded directly, though its impact may indeed be both
observable and recordable. Recording knowledge unavoidably
strips it of much of the context that had originally transmuted it
from mere information.
Let us consider an example of these models at work.
How do I know it is going to storm?
J is provided with the information that clouds are gathering
over the city. J believes that sizeable cloud formations lead to
storm with lots of thunder and lightning. In J’s mind, having
verified that clouds are gathering, the knowledge is formed that
a storm is brewing and J decides to stay indoors, to avoid the
impending storm.
Parenthetically, this example makes it obvious that there is
indeed a fine line between knowledge and belief. Let us say that
knowledge has an external origin, while belief is purely internal
to the mind or, alternatively, that belief is endogenous to the
mind, while knowledge is at least partly exogenous to the mind,
though both knowledge and belief are formed in the mind.
For present purposes, let us proceed on the assumption that
knowledge is predicated on the presence of information about
the world external to the mind that is mediated through a
person’s belief system.
Returning to our example, J now knows that a storm is
brewing, because there is verifiable information that leads J to
form that conclusion. If K were provided with the same
information, a different conclusion may result, because K’s belief
system may be quite different from J’s. Indeed, if J were to say
to K that J knows that a storm is brewing, K would not accept
that as knowledge of the world, but as information about J’s
state of mind or as a statement of belief by J.
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If K’s belief system were to hold that storms do not happen on
Thursdays and if the day in question were a Thursday, then the
information about the cloud formation would not lead K to
conclude, as J had done, that a storm was brewing. Provided
with the same information, J and K would know quite different
things.
This ambiguity is not restricted to the social sciences, by the
way. The “hardest” science of all, physics, is confronted with a
very similar problem of uncertainty. As classical physics gave
way to quantum physics, it also conceded that the world is not
as solid as it may seem (Koestler 1989; Davies and Gribbin
1992).
Modern physics is not really concerned with ‘things’ but
with the mathematical relations between certain
abstractions which are the residue of the vanished things
(Koestler 1989, 544).
Interpreting the weather, organisations, human behaviour or
the microworld of quantum particles is about mapping patterns,
rather that objective quantification or mere description.
The importance of patterns
Pattern recognition is perhaps the aspect of human cognitive
skills that most distinguishes us from other animals (de Bono
1990; Calvin 1997; Pinker 1999). Also we have seen that
pattern recognition is integral to the scientific method.
In fact, pattern recognition is what marks an expert in any
particular field.
Patterns capture knowledge that experts apply in
solving recurring problems. What's reused when a pattern
is applied is the knowledge of many experienced designers
(Rising 2002).
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A particular and significant type of pattern is captured by the
notion of belief.
The importance of belief
The models in Figures 13.2 and 13.3 are based on the
premiss that while information has meaning (information = data
+ meaning), it is akin to an inert substance, with no inherent
power of action, motion, or resistance. One must add something
to make it useful and that something is belief (in the form of
expectations), derived from experience (or knowledge =
information + belief).
What does all this mean?
There are differing views on what science is, be it soft or
hard, and what it can do. The traditional (or realist) view holds
that science is about discovering hitherto unknown reality;
realists maintain that scientific theories are (or can be) true
descriptions of an independent reality.
On the other hand, instrumentalists claim that scientific
theories are not true descriptions of reality, but are useful
instruments that enable us to structure and order our
environment (Cole 1995; Golinski 1998). Somewhere in the
metaphorical middle are relativists like Thomas Kuhn (1970).
Kuhn put forward the view that science is the application of a
body of beliefs (a paradigm) to observed events - scientific
theories are a representation of the best judgment that can be
made within a given paradigm. Paradigms are impermanent
phenomena, according to this school of thought, and scientists
will shift from an existing paradigm into a new paradigm - a
process described as “scientific revolution”.
The astute reader will observe that, for Kuhn, science is the
outcome of the application of a framework of beliefs to patterns
of observed events. This is not far away at all from the definition
of knowledge represented in Figure 13.2 and discussed in this
Chapter. This is a comforting occurrence of triangulation, where
two different approaches lead to a similar conclusion; for what is
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science about, if not knowledge?
There is a linguistic addendum that reinforces the
triangulation effect as the etymology of the word science is from
the Latin word scientia, which translates as knowledge in
English.
If one is managing knowledge, one is managing an end to end
process that links data, through information and knowledge, to
action. In practice, this means that to understand knowledge we
must first come to grips with the meaning of belief and with the
concept of meaning.
Beliefs are shaped by expectations. In turn, expectations are
constructed by interpreting experience, by attributing meaning
to events. Thus, it is possible to affect or shape belief systems
held by people in organisations by managing their behaviour
and by providing common cognitive and interpretive tools.
This is not a new challenge for humanity; thinkers have been
grappling with such issues for thousands of years. Buddhism
has a time-tested formulation of these concepts, drawn from a
sophisticated analysis of the human mind.
It is called
mindfulness.
Understanding and practising mindfulness
Mindfulness is the continual application of presence of mind,
echoed in Kuhn’s discussion of reflexivity and in double loop
learning.
Mindfulness means being aware of one’s belief
systems, emotions and thinking processes, and then acting on
the basis of that understanding, fully prepared to reap the
consequences of our beliefs being externalised as actions.
Mindfulness is the opposite of conditioned thinking; it helps
us to avoid simplistic interpretations of reality and ritualised
responses to the world (Tart 1994).
This is as relevant for organisations as it is for people. As we
will see when we explore the nine metaphors of organisations,
much of what organisations do (and the people in them) is
conditioned by the past and by an unreflexive view of the
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organisation’s reasons for acting (including failure to act within
the rubric of action).
Because organisations are not mindless machines, operating
in a predictable and stable world, this unreflexive approach is
fraught with danger, for the organisation, its members and
anyone who is within its sphere of influence.
This is how knowledge management differs from information
management and data management.
Managing knowledge
involves mindfulness, it requires people to manage behaviour
and the context within which beliefs are actuated and given
meaning. By way of contrast, managing data or information is
primarily about managing objects, be they physical or digital – a
machine can do that.
The issue now is how does this assist us to form a better
understanding of organisations?
Developing the plot: Understanding organisations
Just as with knowledge management, it is difficult to capture a
universally agreed view of what constitutes an organisation. The
more recent literature suggests that an organisation is actually
more than a mere collection of people, machines and processes,
more than the sum of its parts. The paradigm that is assuming
dominant status holds that an organisation is a self-organising
system.
We will come back to this concept after we have examined the
full range of beliefs that are applied in organisation theory, by
discussing various metaphors or images of organisation.
The plot unfolds: The many guises an organisation may take
Gareth Morgan has produced a considerable body of work about
organisations. In his book Images of organisations he put
forward the hypothesis that management theory and practice
are shaped by metaphors, by images of organisation that are
pervasive.
Morgan put forward eight such metaphors. The reader will
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observe that a ninth image has been added, as the author’s
contribution to the menagerie of imagery. The ninth image is a
knowledge management metaphor of organisations.
In reading, what follows it is important to remember that
understanding how the various actors view their stage, their role
and the roles of others is crucial to understanding the meaning
of what one is observing, but one ought not confuse the script
with reality.
The organisation as a machine
This is the classical, FW Taylor (1911) meets Max Weber
(1947), view of the world. An organisation is an instrument that
has definable goals and objectives. It is a closed system, which
can be designed as a rational structure of jobs and activities,
with its blueprint as the organisation chart.
People can be selected, trained and managed or operated as
components of a larger machine; their behaviour can and should
be expected to follow predetermined rules.
In this sense, management and organisation design are an
engineering exercise.
The environment is assumed to be
predictable, if not stable; and solidity, reliability and
predictability are fundamental. The whole is the sum of its
parts and each part is dispensable and replaceable.
The
organisation can be broken down to its component parts and
then reassembled to its original state.
The strengths of this view are many. This is an efficient and
effective way of managing the world, reducing even the largest
and most complex to a set of manageable, measurable and
scalable problems, amenable to predetermined solutions.
There is a right way to do everything and anything and it can
be taught. Everyone’s performance can be observed, measured
and improved. Nothing is impossible if one has the right tools
and the right command structure.
The weaknesses of this model are also many. If the world is
not predictable, predetermined solutions are likely to be found
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wanting or, alternatively, sudden shifts will cause much stress
and expense. Levels of creativity and initiative will be low and
the upper layers of the organisation risk becoming separated
from the reality of the shop floor and of the outside world.
The organisation as an organism
This metaphor has been gaining favour through most of the
20th century, at least since the famous Hawthorne studies (Mayo
1933) and an increasing focus on relationships and on the
significance of leadership as the means to provide people with
meaning and purpose (Barnard 1938).
The intellectual roots of this metaphor are in social
Darwinism and in the corporate state philosophy embodied in
Italian Fascism.
The chief characteristic differentiating this view from the
preceding metaphor is that Taylor saw people as cogs in a
machine, but nevertheless as individuals. At the Ford Motor
Company, often thought of as the epitome of Taylorism, each
worker was a rational individual, motivated by material rewards
and controlled by the system.
This is not so in Chester Barnard’s ideal organisation.
Management theory of the 1930s assumed that people were hive
creatures - many worker bees to hew wood and draw water and
a few “queens” to provide guidance and meaning to all. The
motivation for the worker bees was provided by social incentives,
rather than material rewards, and control was effected by
internalised moral precepts (Barnard 1938).
The modern manifestation of this metaphor has shed its
totalitarian guise and requires us to accept that organisations
are (or behave as if they were) living systems, and asks us to
believe that congruence with the environment is crucial. Fit
with the environment determines survival and success and
shapes the organisation and its relationships with its ecology.
This image takes us away from the world of engineering,
where closed systems dominate, and into the world of biology,
where systems are open to the outside world. An organisation is
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a set of interrelated sub-systems, where the whole is something
other than the mere sum of the parts.
Unlike a machine, an organism, such as a frog or a human,
cannot be taken apart and reassembled, at least not with the
expectation that it will retain its functionality.
Within this metaphor, Maslow (1943) and Hertzberg’s (1959;
1966) models can be accommodated, as well as Trist and
Bamforth’s (1951) classical study of longwall coal mining. These
are all studies of the organisation as a sociotechnical system,
leading us into systems theory and the study of open systems.
The body of literature known as contingency theory fits
within this realm, showing us that there is no single best way of
organising people and activities and that the role of management
is to enable the organisation to integrate successfully with its
environment. Many typologies of organisations were produced
by authors such as Burns and Stalker (1966), Lawrence and
Lorsch (1967), Thompson (1967), Miles and Snow (1984) and
Henry Mintzberg (1989).
This is a dynamic view of organisations, which allows for a
multiplicity of approaches to design and management and that
highlights the shortcomings of strategic planning models and
mechanisms. It is the world within which Michael Porter has
perfected his analysis of competitiveness (1980, 1985).
It is also the world within which the most modern forms of
organisations, often labelled as the virtual or network
organisations, may be found (for example, see Savage 1996; de
Geus 1997).
More recently, the focus has moved from studying the
organisation as an organism to the application of ecological
principles, to develop a population ecology view of organisations
(Robèrt 1997).
This metaphor resonates well with the experience of life we
have as organic beings in an ever-changing social environment
and it also offers a flexible and rich source of concepts and ideas
that appear to fit that experience. The wealth of literature that
belongs in this realm is staggering and is a good indicator of the
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usefulness of this image of organisations.
On the other hand, as Morgan emphasises, organisations are
not organisms and the environment in which organisations
operate is socially constructed to a greater degree than the
biological environment in which biology developed its analytical
and descriptive tools.
Moreover, there is an unreal and unrealistic level of passivity
embedded in this metaphor, which ignores that organisations,
unlike most organisms, have choices and can exercise great
influence over their circumstances. The legacy from the 1930s
is still there, under the surface.
In the end it is safe to say that while organisations are
probably not organisms, understanding organisations is as
much an exercise in ethology or psychology as it is a problem of
engineering.
The organisation as a brain
This metaphor takes us into the world of complexity theory,
where complexity arises from the interaction of a few simple
components and where the digital age comes into its own.
Within this world, the organisation, like the human brain, is
a networked intelligence, whose success depends on the number
of active connections it has and is capable of managing and on
its information processing capacity. Organisations, like human
brains, are communication and decision-making systems that
rely on both single loop and double loop learning.
We are told that organisations are holographic. This means
that the whole can be encoded in all the parts and each part can
represent the whole. Morgan discusses at length the literature
supporting the view that the human brain is itself holographic,
though this view is by no means dominant (McFadden 2000).
Concepts drawn from cybernetics dominate the thinking
here, as manifested in the quality movement and the writings of
Juran (1995), among others. There are strong links with the
flux and transformation metaphor (below)- particularly in regard
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to self-organisation and self-generation (or emergence).
The four underpinning principles are:
1.
Build the whole into all the parts, focusing on
corporate culture, information systems, structure and
roles.
2.
Design a degree of redundancy, “excess capacity that
can create room for innovation and development to occur”
(Morgan 1998, 101).
3.
Requisite variety, “the internal diversity of any selfregulating system must match the variety and complexity
of its environment if it is to deal with the challenges posed
by that environment” (Morgan 1998, 103).
4.
Minimum specs, a “degree of ‘space’ or autonomy that
allows appropriate innovation to occur” (Morgan 1998,
105).
Despite the physiological language and context, this view of
organisations comes from the more developed reaches of
systems theory, and its limitations are of a kind similar to those
that afflict the organisation as a machine metaphor,
paradoxically.
Just as Taylor saw man as an extension or a component of a
great machine, an extreme view of the organisation as a brain
takes us to artificial intelligence (“AI”), in its soft and hard forms
(Minsky 1988; Calvin 1990).
The organisation as a culture
This is another holographic approach.
Within an
organisation, one will find versions of the same values, rituals,
ideologies and beliefs as are found within the dominant culture,
and an organisation is an enactment of shared cultural values.
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…the organisational culture perspective puts on a
different set of ‘lenses’ through which to ‘see’ an
organisation.
When we look through these special
organisational culture lenses, we see a mini-society made
up of social constructions (Ott 1989, vii).
An organisation, if transplanted to a different society, is likely
to take on a different cultural identity. Dealing with a branch of
a transnational in New York will be quite different from dealing
with a branch of the same organisation in Berlin or New Delhi or
Moscow. This will be so, regardless of established procedures
that organisations may have mandated across the continents
(Hampden-Turner and Trompenaars 2000).
Moreover, within an organisation, one is likely to find
subcultures or parallel cultures. This may be a reflection of
fragmentation visible in the broader society; certain classes of
people may be more likely to end up in a certain type of
occupation. Subcultures may also result from processes and
characteristics endogenous to the organisation.
Organisations generate their own values or belief systems.
For example, in a jail or in an asylum, inmates and their
custodians will share a substantial portion of their lives, but not
their values, beliefs or expectations (Goffman 1968; Braginsky et
al. 1969). In a large enterprise, the sales staff may be pursuing
a different set of values and will enjoy different rituals from the
production staff and both may diverge from the cultural
practices of senior management.
Bringing about change in an organisation is seen as a
process of cultural change, with all the risks and difficulties that
implies. Culture is semiotic, webs of significance people have
created. The study of culture is not an experimental science,
where we search for laws. Rather, it is a search for meaning
(Geertz 1973) or an attempt to make sense from a multiplicity of
inputs by assigning patterns of meaning and significance to the
world (Weick 1996).
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While we may believe that we are changing a business
process or a procedure, we may actually be challenging how the
people in the organisation understand themselves and how they
value themselves. A change in procedure may invalidate a
person’s self-perception.
This may seem like an extreme view, but both the literature
and the reader’s own experiences will add validity to this
assertion.
Sometimes the term organisational climate is used as a
synonym for culture. Organisational effectiveness, climate and
cultures are dynamic constructs, which interact with each
other.
The literature on gender and gender differences is also
significant here, as a juxtaposition is created between masculine
and feminine values and organisational methods (Game and
Pringle 1983; Scutt 1994).
The strengths of the culture metaphor are its focus on shared
meaning and symbolism. It encourages deep reflection and
facilitates a better understanding of the reasons people in
organisations do what they do. It takes us below the surface of
visible behaviour and of explicit knowledge and gives us a range
of tools to understand and to manage change and its impacts.
The weaknesses derive in part from the false security that
may follow upon the acquisition of a little knowledge or
understanding.
The metaphor can be used for malicious
manipulation or “values engineering”, as Morgan terms it.
Then, this view of the world allows for extreme forms of postmodernism to take root, encouraging us all to believe that the
world is only what we make of it. Thus, all values, beliefs and
norms have meaning only in their context and may not be
compared. All reality is socially constructed and truth itself is a
relative concept.
Lastly, culture in and by itself does not explain or account for
the fact that individuals are more takers than givers in human
society. There is a power dimension that culture does not deal
with adequately, but is dealt with by the next metaphor.
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The organisation as a political system
Just as the cultural metaphor asks us to accept that
organisations are miniature exemplars of the broader societal
culture, this metaphor asks us to accept that an organisation is
a polity, a form or process of government. This view has been
around for a long time, as typified by Machiavelli’s The Prince,
perhaps more easily approached through the modern
reinterpretation by Jay (1987).
In this metaphor, conflict and conflict resolution are key
concerns for management, and often provide the raison d’être
for the organisation itself or for a significant component of the
organisation (professional mediators, human relations advisers
and so on).
This metaphor sits between the cultural and machine
metaphors, as it is about power, authority and control, just as it
is about the values and norms that bind us together. The most
modern aspects of this image are reflected in the literature on
governance.
Within this metaphor, a taxonomy of organisations may be
constructed, reflecting the broader taxonomy of politics. An
organisation may be autocratic, where one individual holds most
or all of the power. This is common in small businesses and in
some cultures. A variation on this theme is an oligarchy, where
a group of partners runs the organisation; this is a model
common in professional services organisations.
Another
variation is feudalism, where the CEO is king, but only as long
as the barons, the senior managers, allow him or her to
continue in that role.
In a bureaucracy, such as a government agency, power is
defined as legitimate authority, where the rules are the source of
power. In technocracies, such as some Silicon Valley companies,
power flows from technical knowledge and expertise.
In
democracies, were rare creatures are found only in the realm of
cooperative community organisations, power is exercised by
codetermination or by consensus.
In most organisations, as in most societies, these forms of
Creating Value by adding Knowledge
421
rule do not exist in pure forms; they are usually hybridised and
sometimes exist side by side, much as subcultures develop
within the culture metaphor.
The strengths of this metaphor derive from its analytical
sharpness. This metaphor challenges the myth of rationality
embedded in traditional analyses of organisations and focuses
on building a stable and effective amalgam of processes that
balance competing interests, including interests external to the
organisation (external stakeholders).
The greatest weakness of the metaphor is its self-fulfilling
character. If you approach life in organisations as an exercise of
politics, you will breed more politics. If you assume that
everyone’s motives are suspect, that will be reflected in your
behaviour, which in turn will affect the behaviour of others. If
one is not careful, the Mafia boss syndrome will strike and
conspiracies will be plentiful, at least in one’s own mind.
Also, accepting a plurality of interests may lead to an
assumption that those interests are supported by a more or less
equal power relationship. This is reflected in the writings of Ayn
Rand (1992, 1996), among others, who assumed that each of us
is equal and capable of pursuing personal objectives rationally
and systematically.
The Marxists (for example Marcuse 1972), as well as our own
experience of life, will always be there to remind us that power is
not distributed equally, but the illusion of the rational man is
powerful; it is powerful enough to have captured the hearts and
minds of most economists.
The organisation as a psychic prison
This is where Plato, Feud and Jung join forces to provide an
image of organisation that reflects the significance of psychic
forces in shaping collective, as well as individual behaviours
(Jaworski 1996).
This is the place where psychoanalytic
insights emerge to illuminate (and sometimes further obfuscate)
otherwise dark and unseen aspects of organisational life.
We have already touched on Plato and the allegory of the
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Callioni
cave, within which the captive humans can see and interpret
only shadows of reality, rather than reality itself. This metaphor
suggests that this allegory can manifest itself in organisational
life, leading members of the organisation to believe that their
construction of reality is indeed real.
This is where groupthink (Janis 1972) emerges as an issue,
together with a clutch of other dysfunctional behaviours and
clusters of behaviours.
We can start with Argyris and Schon's work (1978, 1985) on
communication, culture and relationship.
Here we find a
powerful analysis of the impact of dissonance between espoused
beliefs and observable behaviour, which lead to confused and
sometimes destructive behaviour and to the development of
“defensive routines”.
An interesting and relatively benign example of this is
provided by the Abilene paradox. In 1974, Jerry Harvey
published a paper titled “The Abilene paradox: The Management
of agreement”. Harvey used an example from his own life, a trip
to Abilene, to set the scene for his thesis. Harvey saw the
management of agreement as a greater problem than the
management of conflict, partly because the existence of the
former problem was not recognised.
Harvey postulated that this seeming paradox resulted from a
failure of communication - members of organisations fail to
communicate to each other their perceptions of reality and their
desires. They do this because of a range of factors, including:
(1) action anxiety; (2) negative fantasies; (3) real risk; (4)
separation anxiety; and (5) the psychological reversal of risk and
certainty.
The strength of this metaphor is drawn from its capacity to
challenge our most powerful assumptions about our own selves,
as well as assumptions about organisations and society in
general.
The metaphor helps us to balance our rational
tendencies with an understanding of the power and worth of the
so-called irrational (or non-rational) side of the human psyche.
It helps us to find better ways to balance often competing
Creating Value by adding Knowledge
423
desires and aspirations and it sharpens the focus on what
constitutes ethical behaviour in organisations.
However, this metaphor may lead us to assume that all we
need do is to understand ourselves and behave ethically and all
will be well. Alas, it is not so, as the previous metaphors have
shown us.
There are many forces at play within an
organisation, as there are within each of us, and good intentions
may not suffice to overcome vested interests or inertia or the
dead hand of runaway bureaucracy.
The organisation as flux and transformation
This metaphor asks us to consider organisations as physical
manifestations of basic forces that are not in themselves
physical or even visible. Four forces are considered:

Autopoiesis or the logic of self-reference.

Chaos and complexity theory.
 “The strains and tensions of circular relations” –
drawn from cybernetics.
 Dialectics or the struggle between opposites.
This is not the place to dissect in detail four quite complex
views of the world, remembering that our purpose here is to
convey meaning by the telling of a story. We will use the first of
the four forces discussed by Morgan to set the scene for this
element of the story; it captures the essence of this metaphor.
The logic of self-reference
As Morgan explains, this image of organisations was borne
from work by Maturana and Varela (1987). Their fundamental
insight was that living systems are characterised by three
features: autonomy, circularity and self-reference.
The brain is not an information or data processing system, as
we have seen earlier, but an emergent function of the interaction
of constructed experience of reality and of memory of previous
experience.
The brain organises its environment as an
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extension of itself. This does not deny the existence of a
separate reality, as extreme post-modernists might argue.
Rather, our lives are the product of the interaction of objective
reality with the brain’s image of that reality.
This approach is not that dissimilar in effect from Weick’s
views, as discussed above.
Within this metaphor, organisations are self-referential and
autopoietic. An organisation renews itself in such a way as to
retain its integrity (Jantsch 1979).
Its adaptation to the
environment is shaped by its existing identity: “whatever future
form it takes will be consistent with its already established
identity” (Wheatley 1994, 94).
For example, a birch sapling will grow into a birch tree,
although its height, thickness, physical shape and life span may
vary significantly depending on its specific environment. A
human embryo will develop into a human being, while a
chimpanzee embryo, despite overwhelming genetic similarities
with a human embryo, will develop into a chimpanzee,
regardless of the environment.
An organisation will develop and change as it interacts with
its environment, but it will retain its fundamental character,
unless it undergoes a process of transformation so radical as to
cause the birth of a new organisational personality.
Nature forms patterns and those patterns arise and develop
according to universal laws, driven by the logic that simple
systems can give rise to complex behaviour. It can be argued
that this holds true for social as well as physical systems and for
the human brain itself. Chaos theory is relevant to all adaptive
systems, to all systems that are self-organising and selfreferential.
This is not to say that the progression from simple to complex
is inevitable. Nature has no plan, and diversity is the product of
chance. However, it is likely that there is a certain evolutionary
advantage in complexity that drives some systems to evolve to
ever more complex forms. This is so, just as there is a certain
evolutionary advantage that keeps some systems very simple,
Creating Value by adding Knowledge
425
even down to one cell and no more.
Again, that is so in the world of organisations.
Some
companies grow ever larger, until some external force intervenes
– as with Bell or Microsoft – or until corporate senility sets in
and the company disintegrates or is sometimes reborn in a
different guise or guises. On the other hand, the world of
business is full of small and micro businesses that will never
grow any larger.
The strength of this view is that it accepts complexity and
tries to work with it. This metaphor does not attempt to control
reality, as with the machine metaphor, or to compute it, as with
the brain metaphor, or to interpret it, as with the culture
metaphor. Rather, it seeks to understand complexity in its
unbounded form, so as to develop the means to shape events by
shaping the context within which those events unfold.
The organisation as an instrument of domination
No story would be complete without a villain and here we find
our villain or do we? This metaphor portrays organisations as
unmitigated exploiters of their employees, of society and of the
physical environment. The seeds of control sown in the time of
the machine bureaucracy have sprouted a world devouring
creation that would have made John Wyndham proud.
In Davos, Genoa and Melbourne, we see a complex alliance of
deep ecologists, anarchists, nihilists, revanchists and the
remnants of the far left portray the corporation as the
instrument capitalism has created to enslave the poor, oppress
the Third World and ravage Gaia.
This anti-globalisation
movement is a naïve reaction, lacking a coherent ideology and
likely to fragment, just like the far left did in the 1960s and
1970s when faced by the continuing failure of capitalism to
crumble.
Marxism in the 19th century developed a coherent ideology of
the organisation as an instrument of class domination. In the
21st century a more moderate, neo-Marxist position is adopted
by those who see the corporation as a sophisticated, uncaring
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Callioni
exploiter of the workforce. The evidence cited is mounting hours
of work, injuries and deaths in the workplace, environmental
damage and the relentless process of replacing people with
technology.
The desire of this movement is not to destroy capitalism, but
to humanise it, to democratise it, much as the nation-state was
humanised and democratised in the 20th century.
The strengths of this metaphor derive from its capacity to
show us that rationality can be, or provide the opportunity for, a
form of domination. By doing so, greater attention is paid to
ethical concerns within and about corporations and
organisations in general, and new or deeper insights can be
developed into the responsibilities and accountabilities of
management.
As with the political metaphor, the risk is that this image of
organisations will focus too much attention on conflict and on
individuals and their motivations.
This may cloud the
fundamental, systemic issues that allow patterns of domination
to emerge.
Towards the climax: A knowledge management metaphor
At this point, our story takes a turn away from the known and
moves into unknown territory. The images of organisation
provided by Morgan are powerful and useful tools, but they lack
an overarching framework, a unifying paradigm. The ninth and
last metaphor has been developed to provide that framework,
within the paradigm of knowledge management. It also provides
the climax for our story.
The mindful organisation
This metaphor, as shown in Figure 13.4, recognises that an
organisation is many things; indeed, an organisation can be all
things and, sometimes, all at once.
When one analyses how an organisation acts, how it
produces value, it is hard to escape the machine-like reality of a
production line or the cybernetic characteristics of the network.
Creating Value by adding Knowledge
427
An organisation in action is both brain and brawn.
The process of organisational and personal self-actualisation
is driven by a complex set of beliefs, borne from and shaped by
the exercise of power, in its many guises.
The environment within which the organisation operates is
organic and in constant flux, constantly transformed by the
interaction of complexity and chaos.
Within and without the organisation, people live and breathe
its reality as each of them interprets it, in a web of meaning that
shapes and colours the landscape where personal, group and
organisational dramas emerge and unfold.
To understand all of these realities and to manage the
components that make up the holarchy that is an organisation,
one requires the capacity to manage knowledge, to develop
frameworks that enable us to manage patterns of meaning,
which in turn shape, drive and characterise the organisation.
Figure 13.4: The knowledge management metaphor of the organisation
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Callioni
Metaphors of organisations: a caveat
What is crucially important is to know where one stands, to
be aware of the beliefs that shape one’s own understanding and
then to be consistent in the application of those beliefs to the
information and data one gathers. To do otherwise will result in
poor judgments being reached, as differing parameters are
applied to compare and contrast, while assuming that the
compass remains pointed to true north.
In using this information, it is important to remember that
what is being described is not the organisation itself, but the
paradigm or point of view of the observer or commentator.
That includes a commentator who resides within the
organisation. A CEO may look upon their domain as a machinelike extension of their mental powers or a crusading change
agent may see the same organisation as an open system, poorly
served by a deterministic and reductionist model of leadership.
It may also be the case that an organisation sees itself
differently from how others perceive it. A machine-like
organisation may perceive itself as an organic creation or viceversa, for example. A degree of incongruence is not necessarily
problematic, but an extreme lack of congruence may cause the
organisation to become dysfunctional. Analysing this in detail
would take us well beyond the scope of this book, but for those
who have an interest there is a substantial body of literature (for
example, see Kets de Vries and Miller 1984).
First understand what position you have, or create your own,
as the categories are by no means fixed. Then, understand how
the organisation perceives itself and how the chief stakeholders
perceive it. At that point, having formed a view of what an
organisation is, you may be in a position to move on to the next
step, which is about understanding how organisations work.
We will do that with a model (Figure 13.5) that assumes that
organisations have a common set of generic processes. These
processes may take different guises, may be occasionally mixed
up or incomplete or missing, but are generally present in
organisations that survive for a significant period.
P lan nin g
P ro cess
Identify C urrent
Position
Identify D esired
F uture Position
Strategic Intent
P1
D ep lo ym en t
P ro cess
U pdate
Scorecard
C ap ab ility
D evelo p m en t
P ro cess
Build C apability
P latform
C1
Perform
Environm ental
Analysis
E1
P3
D evelop
O perational
P lans
D evelop
Strategies
D1
Perform G ap
A nalysis
P2
D2
Perform G ap
Analysis
C2
Identify Lik ely
F uture O perating
Environm ent
E2
P erform Projects
& A ctivities
D3
D4
D evelop
W ork force D ev't,
Asset M ngt, &
IT &T Plans
C3
D evelop T eam &
Individual
C ontracts
Assess F uture
R isk
C4
D evelop R isk
M anagem ent
P lan
E3
E4
E valu atio n
(L earn in g )
P ro cess
Action: Review
Strategic Intent
D evelop
Perform ance
Inform ation
F ram ew ork
EA
G ather D ata on
C urrent
Perform ance
EB
Perform G ap
A nalysis
EC
Figure 13.5: A process model of the organisation
D evelop
R eporting
F ram ework
ED
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Callioni
The components of the model
The driver of the model is the organisation’s strategic intent,
which will change from time to time to reflect shifts in policy or
politics.
The planning process
The planning process contains an analysis of the current
position, a method to form an understanding of the desired
future position and an analysis of the gaps between the desired
future position and the current position.
The deployment process
This process describes how things actually get done.
The capability development process
This process involves understanding the current skills and
assets the organisation has, understanding what the future is
likely to demand, plans to develop existing skills and assets so
that they can meet likely future demands, and development
plans for teams and for individuals.
The evaluation (learning) process
There are two parallel sub-processes here. The first subprocess starts with an understanding of the current operating
environment, an understanding of the likely future operating
environment, an assessment of the risk that future environment
presents that are not dealt with in the current environment, and
a plan to manage that risk.
Double-loop learning
The processes covered thus far involved single-loop learning they enable the organisation to learn how to perform better. For
example, having defined a desired future position, the
organisation develops strategies to secure that position.
How does the model work?
The model can be used to diagnose where an organisation or a
significant component of an organisation is deficient.
For
Creating Value by adding Knowledge
431
example, the organisation may not have developed one or more
key elements of various processes. Having identified what is
missing, an analysis of the linkages, of the organisation’s
strategic intent and of the current operating environment can
inform a process of prioritisation.
For example, if the organisation is operating in a high-risk
environment, preparing a risk management plan should take
priority over developing a workforce development plan.
Alternatively, where an organisation is intent on change that
affects working conditions for staff, the workforce development
plan may be accorded the highest priority.
Using the model, it is possible to change the strategic intent
of an organisation or its leadership without altering significantly
the structure of the organisation. That is because the processes
described in the model can deliver any output that is typical of a
public sector organisation.
If these processes work, the
organisation’s structure can aid or impede the effectiveness or
efficiency of the processes, but it will not stop them delivering
the right results.
Lastly, returning to our core interest in knowledge
management, the model can be used to identify where and how
an organisation creates and manages knowledge or to help
design processes that are congruent with knowledge
management principles.
Creating value: Cui bono?
Now that we have tools to understand what an organisation
is (or is perceived to be) and how it does what it needs to do, it is
time to consider whom the organisation serves (or otherwise
affects significantly). The matrix model of value creation (below)
is a tool that may be used for that purpose.
Callioni
432
Customer/clien
t
Shareholder/
owner
Regulator(s)
Surrogates
(lobby groups
et al)
Organisation is accountable for
... quality service
Measured how?
Personal satisfaction;
return custom
By whom?
The customer
... return on investment
Size of return on
investment
Complaints, legal
action
The shareholder
... meeting policy objectives,
delivering services according
to prescribed minimum
standards
... satisfying policy interests
Community
... being a good corporate
citizen
Partner
(supplier)
... meeting agreed (mutual)
obligations
Satisfaction of own
clients/customers
Amount of tax paid,
management of the
environment, how
employees are
treated
Personal satisfaction
Table 13.1: value creation matrix
The regulator(s), the
Minister, the
Government,
Parliament
Its clients/customers
The community,
opinion leaders
The supplier
ef or expectation of actor
Organisation exists to meet my
needs
Organisation exists to provide
me with a financial return
The system is more important
than the organisation
Success metric
Extent to which
recipient perceives
needs are met
Quantum of return
Organisation stays
within the rules
We understand and can
represent the interests of
affected persons better than
they can
The organisation has a duty to
the community
Organisation
legitimises role
The organisation provides me
with an opportunity to sell my
products/services
Own
organisational
objectives realised
Organisation is
perceived as a
(net?) contributor
to the community
Creating Value by adding Knowledge
433
Note that the matrix has been populated with actors chosen
only as an example, as an illustration of the uses to which the
model may be put. You will want – indeed need – to generate
your own list of dramatis personae, which can be produced by a
process of stakeholder analysis.
Having now formed a view of who, what and how (and
perhaps why, also), what is one meant to do with that
information?
Aligning values, expectations and behaviour
At this point we can introduce another model, which will assist
in shaping any necessary intervention. The model is intended to
align values, expectations and behaviour within the
organisation, as a whole, within sub-sets, and within processes.
The model is predicated on the assumption that an
organisation is made up of holons (Koestler 1989; Wilber 1994)
and is holographic (see above).
A holon is something that is complete in itself, but has
properties that are not present in its component holons. For
example, water is a holon, made up of two hydrogen atoms and
one oxygen atom. Each of the atoms is a holon, but each atom
does not separately have the characteristics of water. The
characteristics of water are in the holarchy that is water.
A holarchy is the architecture of arrangement of successively
more complex holons. This is true of physics (eg from subatomic particles to complex molecules), of living creatures (eg
atoms to molecules to cells to organs to the organism or
creature), of organisations and of society.
Holon is not synonymous with fractal. Like a holon, a fractal
is complete in itself and it is infinitely scalable. However, a
fractal construct, unlike a holarchy, is not necessarily more
than the sum of its parts.
So, in this model each component of the organisation reflects
the characteristics of the organisation and vice-versa, but the
organisation is more than the mere sum of its parts; the
Callioni
434
organisation has a separate identity and a separate existence
from its component parts.
Strategic
Process
Component
(Eg division
or team)
Organisation
Tactical
1
Sustainable
2
In line with
business plan
4
Shared
purpose
5
Quality
relationships
7
Shared
world-view
Operational
3
Cost-efficient
6
Collaboration
8
Alignment
9
Focus
External environment
Figure 13.6: Organisational alignment model
The denouement: Turning knowledge into wisdom
This is the end of our story, where the reader returns to reality,
hopefully having learnt something of value and having been
entertained on the way – or at least not so bored by the writer’s
efforts as to leave half way through. What can a conscientious
reader take away from this particular story?
Creating Value by adding Knowledge
Figure 13.7: Planning and managing an intervention
435
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Callioni
We have seen how applying knowledge to action mindfully
can produce wisdom and we now have a great deal of knowledge
about organisations and tools we can use to effect meaningful
change in organisations. However, how does one use this
knowledge and these tools wisely?
The process shown in Figure 13.7 is intended to guide the
user towards this end.
Do not be fooled by the linear logic inherent to a static, twodimensional representation of a dynamic, multi-dimensioned
reality. Indeed, in formulating an intervention (which may be
limited to a process of analysis), one may start at any point; the
beginning is where one chooses to begin, the point where one
enters the representation. So, one may start by analysing
patterns of action, rather than patterns of belief or meaning, for
example.
However, it is crucial that all aspects be analysed and
understood and that, at the end at least, all aspects are brought
together, using the model as a template.
Having said that, it is suggested that, whatever point of
access is chosen, that choice ought to be made with a
hypothesis in mind, in the sense Popper and Medawar intended
(see above), but with TS Eliot’s words in your heart.
We shall not cease from exploration and the end of all
our exploring will be to arrive where we started... and know
the place for the first time.
Creating Value by adding Knowledge
437
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