The Evolution of Business Knowledge

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Shotter, J. Sole, D. British Journal of Management, 13, special issue: 17— Tether, B. Thorpe, R. Tilley, F. Jones and F. Chichester: Wiley. Van-der-Heijden, K. Eden and J. Spender eds. Von Krogh, G. Easterby-Smith and M. Lyles eds. Oxford: Blackwell. Wilkinson, A. Zahra, S. Academy of Management Review, 2: — Zhang, M.

This includes sports, travel, and hobbies, and includes any activity through which customers either support or participate in these types of activities. This excludes companies that only provide electronic outlets over the Internet or through catalogue and call-centre—based operations. This involves the provision of consultancy or support in the delivery of idiosyncratic solutions. Outcomes are likely to be intangible as well as tangible. While the product or service may vary between customers, this will usually be within a typical professional or business framework and rely on tried and trusted methods for product or service solutions.

The goods will be in any sector, but they will rely on readily available technology, processes, and systems during manufacture. The three outlooks Start-up Stable Innovative Typically, a company in this category will be within the early stages of its initial business venture and will be searching out or developing its market potential. The systems and processes will still be in the process of development, and the company will be establishing its identity within its market place.

This type of company will have been established for any length of time. This company may have been established for any length of time and demonstrates periods of organizational renewal, either through the development of new products and services or new processes. The rate of change may be either adaptive or revolutionary. It examines the ways in which senior managers use knowledge and the ways they help to adapt and create knowledge.

There are a number of crucial questions for which research to date has not yet provided adequate answers: What knowledge do executive managers use? What knowing is involved in management? In so far as contributing to strategy is an expectation, how is this accomplished and what knowing is required for this? Not least, there is the range of ways in which different types of knowledge including knowledge of suppliers and of customers, of processes and of support services, of science and technology and the different requirements for knowledge are distributed in complex organizations.

There is also a network of social relations and expectations in which these types of knowledge are embedded and a range of routinized and institutionalized practices, such as board meetings and annual business planning cycles, in which they are embroiled. Each of these can limit and inhibit the dispassionate use and scrutiny of knowledge.

These are some of the features that make higher echelon knowledge distinctive and problematic compared with more operation-level knowledge 51 J. Storey, G. Salaman, and R.

The technology ‘tornado’

Holti and practice, which to a much greater extent can be subjected to routines— albeit ones that nearly always require some element of additional tacit knowledge. Previous work e. Whitley has noted that management knowledge is especially contextualized. This makes it less amenable to abstraction and professionalization. Our purpose was to probe further the nature of this embedded and contextualized knowledge and the social practices that sustain it. We found that executive managers were caught within a set of competing values and expectations. They were expected to use rational decision-making tools.

They were expected to adopt a corporate perspective and yet also lead their specialist divisions. They were expected to be alert to changes of myriad kinds and yet also to maintain a steady hand on the tiller. While such embeddedness blunts organizational agility, and even undercuts attempts to develop strategy as a rational process of decision making, in many circumstances it ironically gives greater resilience to top management action in the long run.

Our work with Ethiopian managers supports this point Woldesenbet, Storey, and Salaman What were they doing when they claimed to be strategizing? Who would they regard as primarily responsible for strategy? With regard to business knowledge, three main interrelated questions are addressed: 1 What kinds of knowledge do senior managers draw upon and deploy? To varying degrees, these questions are amenable to empirical enquiry.

He contends that studies have focused either on interpersonal interactions, on the one hand, or societal level interpretations, on the other, while the organizational level has been neglected. The notion of levels is useful but problematical. There are potentially numerous levels that could be conceptualized, the boundaries are fuzzy and practice often operates at multiple levels simultaneously.

Thus, an activity episode at any one time may appear to be directed at the interpersonal level, but it may also carry implications and derive meaning from organizational, industry sector, national, and international levels. But, for ease of presentation given the space constraints in this chapter, we focus on just two levels—micro and macro. The micro refers to practical activity within organizations; the macro refers to interpretations and practices at the supra-organizational level—including sector and societal levels.

Our aim is to reveal the interpenetrations of knowing across these levels. This was encountered, for example, in sectors as varied as pharmaceuticals, construction, graphics and print, education, and so on. A little more probing, however, revealed other levels of knowing. One level was the meta-narrative rehearsed at major sector conferences and embellished by leading management consultants in the respective sectors. But another level was the knowledge about the organization and the sector as held by different directors and senior managers. In this chapter we seek to illustrate how strategizing, and the associated business knowledge on which it was based, were found to operate at these different levels, and most essentially, how knowledge was translated between and within these levels.

The strategy-as-practice perspective seems potentially helpful in this regard. This approach to strategy research treats strategy as something that is done and therefore something that can be observed. The need and relevance of attending to the micro aspects of practice stem ironically from changes in the economic context. The faster pace of change means that strategy-making is no longer something occasionally undertaken in elaborately planned episodes: change is constant and so more people are involved in strategy and do so more often Johnson, Melin, and Whittington 5.

Process research has arguably not delved deeply enough into actual practices. Brown and Duguid argue that practice is what occurs inside processes. These include: what managers actually do and with what techniques and we would add with what knowledge , the extent of agency, and the extent of institutional and societal forces.

Each of these, singularly and together, affect strategic decision making. Managers draw on some of these wider knowledge resources and at the same time they contribute creatively to them. They adapt existing knowledge and in the practice of its attempted utilization they create new knowledge. Nonetheless, managers are the ultimate arbiters of guru concepts and frameworks: if they purchase them and use these forms of knowledge, then that patronage ensures the growth of that business knowledge. If they ignore even the most well-argued frameworks, then these theories will struggle for survival.

When strategy does become explicit, this may be because of a breakdown or threat to the normal order. It may be prompted by critical questioning from powerful stakeholders, for example, new shareholders, new non-executive directors, a regulator, and so on. But the way in which this is then accomplished is of great interest because these periods tend to force the surfacing of previously unarticulated knowledge. Divergent statements stimulate enquiry as to the sources of difference. Divergence often results in fracture.

The empirical study The chapter draws on case studies across a range of sectors including retail, construction, business services, health care, engineering consultancy, graphics, print, and banking. We observed executive boards in action and 55 J. Holti conducted one-to-one interviews with executive directors.

The research project concentrated on executive teams. There were three phases to the casework. The second phase was more detailed work with six selected cases. The third phase was the most intensive and this involved action research with three of the organizations. The knowledge work undertaken by the chief executive and the other executive directors was the focus of attention.

The strategy-as-practice perspective was useful because it encouraged dual engagement with what these managers did and said. As knowledge cannot be seen, we had to infer it from action and explanation of action. Hence, with respect to the case studies and the action research sites, three mutually reinforcing methods formed the heart of the study: in-depth one to one interviews with each member of the respective executive teams; direct observation of management board meetings; and scrutiny of secondary sources, including, most notably, executive board agendas and minutes plus internal company reports.

The observations of executive board meetings allowed insight into the naturally occurring conversations of directors and senior managers and facilitated the observation of non-verbal signals. Our empirical work included two sector-level organizations. One was an association of premier companies in the construction industry; the other was an association of leading companies in the cleaning and support services industry. Each of these organizations was seeking actively to change the business models of their respective industries. Each allowed us high-level access to senior executives who were grappling actively with ideas about fundamental sector-level change in these respective industries.

We were able to observe these senior players in debate and negotiation with each other and were able to interrogate them further about their views and actions following these meetings. We begin with the construction companies and then compare the situation with the large cleaning and support services companies. Clients in both the public and private sectors are targeted, most especially the big repeat procurers. Members of the association were expected to be committed to that agenda. The methods for change included programmes of training events, demonstration projects, communication of best practice, measurement and self-assessment tools, and action research initiatives.

There were, however, a range of views as to the precise nature of the new model. We learned a number of lessons pertinent to our knowledge study through our engagement with these players. Holti This case illustrates the indeterminate and contested nature of business prescriptions as well as the gap between their espousal and their implementation. Changing the business model in cleaning and facilities management The organization we studied in this sector was the leading trade body for cleaning and support services companies.

There were many similarities with the construction case. This again was a fee-based membership body that employed a salaried chief executive and a secretariat. The executive board was likewise intent on changing the industry business model. It wished to move the industry from a low-cost, low quality, low margins, and low pay model to an enhanced value-added service model. Other elements of change they envisaged were an expansion in the range of service offerings.

For example, in addition to the core cleaning services, there could be such additional services as meeting room management, including the booking of rooms and the provisioning of water, stationery, the setting up of audio-visual equipment and other requirements.

The evolution of business knowledge in the context of unitary and two tier board structures

Some members of the executive, including the director general of the association, believed that such a fundamental shift was feasible. The aspiration was to raise the quality and the image of the service and the industry. But some members of the association were sceptical. These two different modes of knowing about the business environment and the business models were explored in our research both with clients as well as a range of contractors.

There was evidence that at least some clients wanted to see a move to the high-value model. They had different interpretations of how the market operated; they drew upon different knowledge about what mattered most to clients; and they drew upon different knowledge systems concerning how the cleaning business model had to be—or could be. The engineering consultancy company We now turn from the sector level of analysis to the organizational level.

Eng-Con with staff provides the engineering services required for the design of buildings of all types: hospitals, arts centres, airports, and so on. Structural, civil, and building services engineering teams are employed. Its staff turnover is half the industry average. By any measure, this company is highly successful and is a respected leader in its sector. Enterprise and talent were achieved and supported at the individual and the organizational level.

The source of enterprise at the individual level is 59 J. Recruitment is a key factor but so is retention, and both are the result of deliberate policies and practices. Organizational structuring and business strategies are designed in ways that take into account this aspect of the business model. Senior managers, including the founder CEO, see themselves as enterprising, and they try deliberately to recruit others who share this quality. The directors were aware of the discrepancies between their own business model and what they perceived as conventional business.

They were willing to learn about and explore more systematic approaches and to this end had invited in consultants and advisers from Business Link and other service providers. They were comfortable in taking their organization forward in a state of some ignorance about the professional norms of management, in contrast to their deep commitment to ideals of engineering professionalism. This case illustrates that skilled practice of senior managers can involve operating without the guidance of generic management knowledge.

We studied senior managers within the constituent businesses and at corporate level. A high level of tacit consensus existed within the top team based on shared but largely un-surfaced, well-established historic assumptions. There was considerable agreement about what the business needed to be like in order to pursue its proper historic role and objectives. These assumptions centred on a highly distinctive normative model of organizations and employment relations, with a consequent emphasis on service and quality with respect to customers.

Because executives shared so many assumptions and beliefs, they found it hard to envision new possibilities or ways in which such innovations could be generated. But some signs of declining performance relative to major competitors were addressed by two types of activity. First, there was piecemeal introduction of modern management processes. These included development and training, executive team-building initiatives, and performance-management and supply-chain redesign. A second initiative was to revive, refresh, and re-emphasize the historic values and unique features of the organization through a relaunch of these and their communication throughout the business.

In short, a major strategy was to surface, revive, and reassert the historic assumptions and models. This initiative could be seen, in terms of the model used here, as an attempt to make the tacit model more explicit. So strategy issues were resolved simply by invoking the accepted and takenfor-granted models. There were thus changes and yet, in another sense, no change. Discussion It is often claimed that the nature of business and business environments has become subject to rapid and far-reaching change.

Product life cycles are shorter, markets are more global, industry boundaries are increasingly blurred, and business organizations are tending to compete beyond conventional boundaries through strategic alliances and various forms of collaboration. The way managers handle these changes is often regarded as indicative of the evolution of business knowledge. But these kinds of accounts are usually presented as an admixture of descriptions of business practice and prescriptions for action.

Less well observed has been the way in which the senior practitioners, who are crucial players in this unfolding drama, themselves interpret their situation. How do managers use their knowledge to weigh and calculate the implications for their organizations? But they seemed incapable of acting in a different way. In the engineering consultancy, the managers had knowledge of institutionalized modern management methods, but they wanted to avoid them or at least treat them with great caution.

Paradigm shifts are often presented as supra-sector trends. Thus, for example, in graphics and print there are insistent depictions of far-reaching transformations of the industry. The new conventional wisdom is based on notions of a shift 61 J. Holti 1. Formalized bodies of knowledge 2. Knowing the organization 5. Organizational routines Activities Identities 4. Contextual routines Fig. The drivers are depicted as increased price competition, globalization, new technology, demand for additional services from customers; the outcomes and consequences are described as just-in-time delivery, shorter print run capability, reduced stocks, and greater customer orientation.

These are socially constituted streams of activities, such as board meetings, strategic planning workshops, or annual budget-setting rounds. This accumulated knowledge becomes part of identity and is in turn constructed through practical action, while practical action in turn shapes identity. As we found in the construction and cleaning services sectors, there are in circulation particular formulae and archetypes that promulgate reformed business knowledge. As institutional theorists argue see e.

Other formulae for organizing may be promulgated by well-developed networks of actors, for example, business process re-engineering. In these cases, senior management practice involves engaging with purveyors of alleged improvement techniques and deciding if and how to let them into their organization.

Evolution of Information System Function

Application of such institutionalized practice generally requires tacit knowing. Through managerial actors, there is considerable scope for variation in interpretations of tools and techniques, as well as variation in the knowing about and indeed knowing what needs to be done as well as how things ought to be done. Thus, in the cleaning contractors and the construction contractors we studied, the applications of the sector-level knowledge shifts were variegated. Circle 3 refers to the sets of recipes for action and common understandings that become established through processes of learning within an organization.

Circle 4 denotes the routines of interaction that become established with actors in external agencies, such as customers, suppliers, and regulators. It reveals how networks of practice cross the boundaries of the focal organization. Boundary-spanning routines, such as annual report press conferences for city journalists, set the context and framework for senior management debates and decision making. Senior management knowledge work involves drawing on these, as well as contributing to their further development.

Holti knowledge in its embedded practical sense. This is presented in three segments: knowing the strategy, knowing the organization, and knowing the context. This uncertainty included the meaning of strategy, what the strategy of the organization could be said to be, or even whether their organization really did have an agreed strategy. Moreover, there was expressed lack of knowledge about how they and their management boards should go about formulating strategy.

To compensate for this we found they fell back on two forms of knowledge: explicit process knowledge about strategy formulation and formulae derived from sector-level bodies and networks. Often, leading management consultants would be hired to help with a strategic review, and they would leave behind a conceptual framework, a new language, and a suggested market position. Work streams and action plans would follow and responsibilities would be allocated. To this extent, these senior teams could then say that for the time being they now truly did have a strategy.

How much difference in practice this made to actual behaviour and its deeper level of business knowledge was often questionable. Both the nature of the supposed current strategy and the preferred nature of a future strategy triggered competing versions. There was also the recurring problem of achieving even a corporate view. But senior managers often criticized them as being too much about individual styles and complementarities.

Because the search for clarity and consensus was not quite so easily accomplished, a crucial aspect of the knowing about strategy was that such knowing was often contested.

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Knowing the organization: Circle 3 There was contestation in knowing about organizational design. Intense debates also occurred over the nature, purpose, and extent of central control.

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  4. Most senior managers in divisions of multidivisional companies questioned the contribution of the corporate centre. Knowledge about the work of the corporate centre was limited from a divisional perspective. Conversely, knowledge about how the divisions were behaving in practice was obscure from a corporate perspective. Given these tendencies, knowing about the organization in a different way—i. Knowledge of important new developments in the external context could be more problematic.

    Holti professional association colleagues, peers in other companies, and so on. Knowing about the organization had various elements. Knowing about organizational routines was important as was knowledge about performance through the interpretation of various sorts of information. With advances in ICT, the availability of, and access to, information of many kinds has multiplied. Thus, the skill is to know how to be selective about this overwhelming amount of information and data.

    Part of the skill was also to know how to make sense of it: that is, to construct a meaningful picture from it. The ready availability of data and information via electronic technologies has meant that it seems less important to know the detail in quite the same way as was perhaps once expected.

    Indeed, the game had changed to such an extent that the sheer availability of information became a source of complaint. There was usually some concern that there were too few measures or too many. The search for the holy grail of the few, relevant metrics was ongoing in the majority of senior executive teams.

    This controversy about simply knowing how the organization was performing was in fact a major source of contention. Markedly different accounts about organizational health including interpretations of progress versus decline were allowed to circulate in a number of these organizations. The implicit business models in the case organizations had accrued their own attendant and supportive routines. Hence, asking managers to subvert such knowledge would be to ask a great deal.

    Within this overall net of organizational routines, senior management knowledge work is shaped and reinforced by the established routines of strategy development and organizational review. This does not necessarily entail stasis: at any point in time, we can see the actors within these routines as capable of undertaking review and innovation Feldman and Pentland This may be one way to introduce a new knowledge system—a new set of realizations and new priorities.

    A new chief executive may be expected to bring a ready-made constellation of diagnosis, values, guiding principles, and solutions that are unfettered by the previous knowledge constraints of the previous regime. Indeed, being seen to actively drive change rather than being driven by it as an object is one of the more notable refrains in the discourse of senior managers.

    It was apparent that almost anything was better than the impression that the board was presiding over a static situation or that it was a hapless victim of drift. Holti long time periods—that reassurance could also be found. The executives needed to know what to change and what to preserve. Conclusions The research discussed in this chapter reveals the nature and use of knowledge by senior managers as they undertake their executive work—and most notably their strategizing work.

    The chapter contributes to the growing literature using an activity-based view of strategy. A crucial part of this activity is discourse: senior management work is to a very large extent constituted by discourse Heracleous Various business models that reveal a recursive relationship between market-related strategies and organizing strategies were constructed by the senior managers in the case organizations. The analysis reveals that the dominant sense-making paradigms provide, at best, loose and incomplete guides to action.

    Likewise, each knowledge-informed solution can usually be countermanded with another. This work rarely involves full or systematically structured debate of the range of perceived possibilities. Different power positions, division of responsibility, and legacy issues conspire to produce adopted stances, which represent political settlements. Strategy-as-practice in the cases studied reveals the recursive interplay between knowledge of the moment e.

    With this type of understanding, we may conclude that key aspects of the skilled practice of senior managers include operating without precise knowledge. We found that senior managers on occasions considered that explicit strategic debates are best avoided, that rhetoric needs to be asserted and inconvenient reality ignored, and ambiguity about the nature of a strategic direction or the state of organizational performance needs to be preserved.

    The ability to work in this way can even be seen as a kind of enacted knowledge that senior managers acquire. They are also usually broadly familiar with the central ideas embedded in the generic paradigm shift models. They know about globalization and agility, about enterprise and empowerment, customer focus, about shorter product life cycles and the need for responsiveness.

    A less optimistic reading suggests that senior managers are sometimes incapable of agreeing a coherent and consistent position and so they proceed with a series of routines and heuristics that have served them well in the past but may mislead them in the changing present and future.

    A third position is that the ability to maintain an apparently coherent position while maintaining awareness of unresolved strategic differences is actually a key feature and strength of senior management practice. While embeddedness undercuts attempts to develop strategy as a rational process of decision making, it ironically gives greater resilience to top management action in the long run. References Abbott, A. Chaos of Disciplines. Chicago: University of Chicago Press.

    Bettis, R. Strategic Management Journal, 5— Chia, R. Holti Feldman, M. Administrative Science Quarterly, 94— Greenwood, R. Heracleous, L. Kuhn, T. Johnson, G. Journal of Management Studies, 3— Mintzberg, H. Frederickson ed. New York: Harper Business. Prahalad, C.

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    Strategic Management Journal, 7: — Industry Recipes. Szulanski, G. Sticky Knowledge: Barriers to Knowing in the Firm. Von Hippel, E. Whitley, R. Research Policy, 89— Whittington, R. Woldesenbet, K. British Academy of Management, Belfast, 12—14 September The other main competitor has got associated with the other dynamic, which is cheap imports from Asia. This new environment is affecting our innovation effort. Before, it was heavily directed towards looking at the market place and seeing incremental improvements in performance that the market place wanted.

    So customers needed chemicals that could speed up their own processes. Now the market is not asking for these sort of things very much at all just now, its all about cost, cost, cost, cost and we just want the lowest cost product ok. These changes contain many dynamic elements, including the interplay of existing global competitors trying to outmanoeuvre each other and the evolution of new markets and competitors.

    The central response of his company was to build up their capacity for radical innovation, and as we will see below, they have achieved this through internal training and development interventions and external political pro-activity. The aim of this chapter is to understand more about these dynamic capabilities, what they are and how they might vary in different contexts.

    Moreover, by drawing on a range of diverse contexts, we demonstrate the pluralistic ways in which dynamic capabilities manifest themselves, the various features that they share, and the processes that constitute them. Our project makes several distinct contributions to the wider EBK project. First, it highlights the issues of learning within and between organizations, which are regarded as critical elements in the development and dissemination of organizational knowledge, and this provides a new theoretical perspective on business knowledge.

    Second, the link to dynamic capabilities provides an emphasis on the relationship between strategic change and operational realities. We conclude with a summary of theoretical and practical implications. The idea of dynamic capability is often claimed to provide the secret to sustained competitive advantage. With increasing global competition, and the potential destabilizing of an economic order dominated for so long by the United States, the sources of sustained competitive advantage have attracted the attention of both academics and senior managers.

    In the last few years, leading academics have pointed out that sustained competitive advantage must result from a learning process, and the idea of organizational learning has been added to the equation Zollo and Winter Eisenhardt and Martin provide an additional angle by distinguishing between moderate and high velocity markets. Despite the amount of academic literature on the subject, there remains a lack of clarity and several unresolved disagreements.

    There is also uncertainty over the difference between capability and dynamic capability. For example, if a company has a distinctive capability in conducting Internet sales, then the dynamic capability would require them to be able to change the way they conducted Internet sales. But what kind of change would need to be undertaken in order to demonstrate that it is dynamic?

    And how long do these changes need to continue in order to demonstrate that they are sustained? In our view there are several problems with the literature and with prior research into dynamic capabilities. First, the bulk of it has been conducted 73 Mark Easterby-Smith et al. It is still relatively rare for the studies to look inside organizations in order to understand what behaviours actually constitute dynamic capabilities.

    Second, most of the studies have been conducted in industries, and during times, which have been obviously dynamic. The development of Silicon Valley in the s is one classic setting for research into dynamic capabilities Saxenian ; likewise the development of biotechnology during the s has been another fertile setting Powell For these reasons, our study looks at European organizations, and we have also selected a sample covering both large and small companies, and both public and private sectors. Our approach to the research in those organizations is discussed later on in the methodology section.

    In this section, however, we do not seek to review this literature as a whole. Instead, we focus on identifying a few concepts that are relevant to our inquiry into dynamic capabilities, and to explain in what ways these concepts are likely to contribute to the relevant literature. In recent years this has settled down into acceptance of three major perspectives: cognitive, behavioural, and socio-political views.

    Representative examples are to be found in the work of Huber , March , and Argote and Darr The behavioural perspective is less concerned with the knowledge that people in the organization possess, concentrating more on the actions of individuals 74 Dynamic Capabilities and the routines that are embedded in the organization Cohen and Bacdayan ; Cyert and March The socio-political perspective was developed to rectify shortcomings of the cognitive view, especially the emphasis it gives to the cognitions of individuals.

    The essence of this perspective is that learning takes place through social interactions between individuals, and that knowledge is therefore co-created, and to some extent exists in the spaces between people Brown and Duguid ; Cook and Yanow ; Nicolini and Meznar One important feature of this perspective is the idea that knowledge is linked to power, and that learning often incorporates political processes Coopey ; Lawrence et al. Second, aspects of organizational learning theory correspond to some of the dominant concepts of dynamic capabilities. For example, the cognitive perspective, which emphasizes the collection and retention of knowledge, has links to the resource-based view of dynamic capabilities.

    Third, there are parallels, such as the idea that learning can be conceptualized at different levels where successive levels imply an ability to learn about the previous level Bateson ; EasterbySmith ; and this kind of thinking attempts to clarify concepts of dynamic capabilities Winter Fourth, there are insights into the socio-political aspects of organizational learning that can shed light on 75 Mark Easterby-Smith et al.

    For these reasons, we think it is valuable to use concepts from learning theory to make sense of dynamic capabilities. However, since the primary focus of this chapter is on dynamic capabilities, we make reference to organizational learning theory only where it helps to clarify, or add further insight, into the primary discussion. Empirical study Research design and methodology One of the main aims of this research was to explore empirically the nature of dynamic capabilities in a range of contexts.

    In doing so, we sought to identify the features and sources of dynamic capabilities, a point that hitherto has received limited treatment within the dominant research tradition on dynamic capabilities. We therefore tried to combine the more traditional perspectives on case study research Eisenhardt with the emergent tradition of grounded theory Locke Our sample included two larger organizations, a hospital trust HealthCo and a European chemical company EuroChem ; and two smaller organizations, an Internet business WebCo and a relatively new venture in the water treatment business WaterCo.

    Each had done very well over recent years. HealthCo had achieved a turnaround in external judgements of its performance within the space of two years; ChemCo had survived despite major increases in external competition and some hostility within the parent company; WebCo had grown rapidly during a period when most of its competitors were failing; and WaterCo was regarded by its parent company as the most successful of nearly thirty recent new business ventures.

    Agreements for access had been secured from senior management in each case before the research project began. Our initial analysis, which is reported in this chapter, concentrates on each organization as the primary unit of analysis, and we illustrate our main points by selecting brief but detailed incidents from within each organization. Data collection was mainly through semi-structured interviews. These included issues such as: the leadership style, the impact of different structures, and the role of external networks.

    These two features led to intermittent, but extended, contact with each organization, which enabled us both to observe strategies and procedures as they evolved, and to track the rise and fall of particular projects and initiatives over a period of at least two years. This longitudinal approach led us to be much 77 Mark Easterby-Smith et al. We sought to account for the differences between each organization, the differences between different parts within each organization, and the variability in terms of capabilities and performance of units and projects over time.

    This has led us to six dynamic features, which appeared to be critical to the success of these organizations, or part of them. We arrived at these six features by systematically accounting for what companies did that was distinctive and was seen to contribute to their changing operational and strategic activities over time. However, as we can see below, these features appeared to be different for each organization, and no organization appeared to be particularly strong on all six.

    We discuss the theoretical and practical implications of this observation later on in the chapter, but for the time being, we summarize these six features as sources of dynamic capability and illustrate them with anecdotes from our case studies. In Table 4. Where we rated something as high, that means that it was a dominant feature that was mentioned by over one-third of the informants at different levels of the organization; similarly, where a feature was very negative this was also mentioned repeatedly in different interviews.

    The range of ratings is also relative to the four companies we have observed, and it is therefore highly likely that there will be a few companies that exceed this range in both dimensions. Subsequent analysis of the middle of the scale will help elaborate on some of the more subtle features of these dimensions, but that is outside the scope of the current chapter. In HealthCo, in particular, the chief executive who was appointed to rescue the Hospital Trust from a major crisis managed to combine an autocratic style of decision making with energetic consultation at all levels of the hospitals and the local community.

    An aggressive style was experienced most severely by senior managers, on the hospital board, who found the CEO to be quite adamant in pushing forward her own ideas. At the same time, she established a number of mechanisms for fully consulting the opinions of clinical and nursing staff. Many of these mechanisms she fronted herself; but she also expected senior colleagues to play a major role in consultation exercises.

    This meant that she was similarly well informed about operational matters and was able to incorporate these ideas into strategic decisions. In WebCo, there was a single similar pattern of leadership that moved easily from strategic to operational levels, although it was much less personalized than in the case of the chief executive of health care.

    This was a relatively small company, which sold Internet technologies to commercial clients and which grew very rapidly in the early s, just as the dot-com boom was collapsing elsewhere. Indeed, because they started off with a strong cash position, they did very well out of acquisitions of other failing Internet companies. In this case, the senior management group operated as an informal team providing strategic direction to the company, but they all maintained very close personal contacts with the staff in the operating sections, occasionally working alongside account managers in dealing directly with customers.

    This meant that on a number of occasions they were able to spot new products and business opportunities from direct contact with customers and operational staff. Each one of the new appointees had exceptionally good external contacts, some to senior members of the regional health authority. In one case, a key contact was responsible for funding decisions and performance evaluations across 80 Dynamic Capabilities the region.

    Another person was recruited from the UK Department of Health, and the Finance Director was recruited from one of the most successful performing Trusts in the country. This meant that the Trust, which was physically located in an isolated part of the country, had abruptly acquired very good communication links with regional and national domains. At a strategic level, they were therefore in close contact with national policy and also able to anticipate new initiatives to which they could respond very rapidly.

    But we also observed a similar transitional story about external networks within EuroChem. At the outset of the research the plant, which is located in a northern city of the United Kingdom, was trying to persuade the parent company in Switzerland to invest in the development of some radical process innovations for which a small research team had already demonstrated good potential.

    The creation and establishment of substantial external networks contributed to radical turnaround in the fortunes of both organizations.

    However, in the other two companies there was an additional feature to the way political support operated. In WaterCo, in particular, the business was set up by the parent company following a week-long seminar aimed at developing major new projects and products. He therefore established a dotted- 81 Mark Easterby-Smith et al. A similar degree of freedom operated within WebCo, but in this instance it was because the main shareholder of the business worked as a member of the executive team on the same site. In his role as the managing director, he had the authority to approve and implement radical products and strategic changes without further reference beyond a brief phone call to the chairman in London.

    In both of these cases, we can see that clear political support can act as a kind of umbrella that encourages and legitimizes local creativity and initiatives. Because the key idea of the business was to expand a French company into a global business very quickly, a decision was taken not to establish new businesses in other countries, but to enter into exclusive partnership agreements with existing businesses in each country.

    Thus, the technical expertise of the original French company was disseminated 82 Dynamic Capabilities to national partners in a series of workshops, secondment, visits, and oneto-one enquiries. These regional sales managers both worked closely with their national partners and also met every other month with each other to share new ideas about business practices and potential clients. In a number of cases, this also involved sharing knowledge about multinational clients where a contract had been established in one country, but where there was potential to expand the business into another country for example, from France to Romania.

    Thus, the regional sales managers acted as a social process of organizational learning and as a conduit for the transfer of knowledge across national and organizational boundaries. For further information on this company, see Prieto and Easterby-Smith In this respect, EuroChem was distinctive because it placed a central strategic emphasis upon innovation. The message behind this principle was simple: that without successful efforts at both incremental and radical innovation the plant would be unable to compete with similar products now being manufactured more cheaply in Asia and would almost certainly be closed.

    They already had a tradition of successful incremental innovation, with process improvements over the preceding twenty years leading to a tenfold increase in productivity. But radical innovation became increasingly important and by , over half of their sales were new products, 83 Mark Easterby-Smith et al.

    Perhaps the last two, leveraging expertise and innovation culture, could be regarded as routines because there is considerable effort within WaterCo regarding the dissemination of business and technical knowledge around the company, and within EuroChem a number of routine activities and procedures were established to generate and nurture the innovative culture.

    Routines were also evident in the way a range of consultative processes and structures were established in order to incorporate the views of employees in strategic directions, but this is only one part of their particular story. The six dynamic capabilities could also be seen to be closely linked to learning processes. The strategic and operational integration, leveraging expertise, and the innovation culture are all closely linked, and dependent upon, learning taking place within the organization; and the relevance of external networks is primarily in ensuring that the organization has the absorptive capacity to learn from its environment.

    In each case, organizational learning is located mainly in social and political processes, although there is an element of behavioural learning in the routines associated with leveraging expertise and innovation culture. Practical implications The key practical implication from our work is that organizations become dynamic in different ways and for different reasons.

    There is an element of path dependency here, in the sense that current policies and strategies must be constrained by previous histories and structures of the organization, but it is also noticeable that each of the four organizations developed these capabilities substantially during the period of our study. So even if there is a degree of inevitability, there also needs to be active agency from managers determined to implement a particular process or strategy. As such, we think that dynamic capabilities may be more under the control of individual managers than has previously been suggested.

    So it is not just a matter of adding dynamic capabilities into the existing repertoire of the organization, it is also essential that companies identify the core rigidities, which may be indicated by weakness or absence in particular dynamic capabilities. Finally, the immediate implication of all this is that there is no single ideal pattern for achieving dynamic capabilities. We therefore suggest that, rather than using these six dynamic capabilities as a rigid template, they should be used as an open-ended checklist against which companies can review and examine their own strengths and weaknesses, and then decide how best to rectify them.

    Conclusions A number of academics have been sceptical about the idea of dynamic capabilities on the grounds that it is vague, tautological, and of limited practical value. In our view these problems can be addressed through research based on live data, and in particular, we believe that case-based, longitudinal research is necessary in order to make sense of supposedly dynamic processes.

    The principle of having one exclusive agent in each country worked well everywhere, except for Italy where, due to regional differences, it was necessary to establish seven separate partnerships. References Antonacopoulou, E. Argote, L. Dosi, R. Nelson, and S. Winter eds. Oxford: Oxford University Press. Bateson, G. Steps to an Ecology of Mind.

    London: Paladin. The Social Life of Information. Boston: Harvard Business School Press. Cohen, M. Cook, S. Coopey, J. Cyert, R. A Behavioral Theory of the Firm. Easterby-Smith, M. Eisenhardt, K. Feldman, M. Huber, G. Lawrence, T. Leonard-Barton, D. Strategic Management Journal, — Locke, K. March, J. Prieto, I. Saxenian, A. Teece, D. Winter, S. Strategic Management Journal, —5.

    The university has historically been an important site of knowledge production. For this to occur, however, they will have to subject themselves to substantial reform or to use a more topical language—to reinvent themselves. Nonetheless, there is no shortage of prescriptive advice from critics who question the practical relevance of 89 David Knights management research or teaching but remain tied to a neo-positivist view of knowledge e.

    Mintzberg ; Pfeffer and Fong , ; Goshal Others, including some of our research team Currie ; Starkey and Tiratsoo ; Wright et al. Business schools are analysed theoretically and empirically by focusing on their pedagogic and research networks and establishing how debates and discourses about policy and practice are mobilized in their construction.

    Theoretically, the chapter engages with debates on the relevance and value of business school research and education, particularly the comments of some leading critics e. Such an analysis cannot, however, be conducted in the absence of an examination of knowledge itself— something that is far too often taken for granted as self-evident. In the context section, I examine current concerns with reform of the business school through, respectively, a conservative, liberal, and radical lens.

    In the conclusion, actor network theory is drawn upon more thoroughly to suggest possible developments that may render business schools less vulnerable to contemporary criticism. While precarious, 90 What Knowledge or Knowledge for What? It is because once again the description is not independent of what it anticipates—the vision of the knowledge economy and the discourses and practices that are perceived to make it possible and perhaps inevitable is invoked precisely to bring it about.

    Some accounts of business knowledge, however, refrain from adopting a positive and celebratory stance not merely to invoke the reforms that can remove the weaknesses, repair the leaks, and transform damaging gaps in cultural expectations into positive and productive outcomes. Critical 91 David Knights management studies CMS , for example, raise fundamental criticisms of management and business knowledge because of its neglect of political and ethical matters Anthony ; Alvesson and Willmott ; Grey, Knights, and Willmott ; Grey , The claim is that such knowledge invariably serves to reinforce and reproduce existing systems of global domination and inequality, and often supports economic and political exploitation at the expense of environmental sustainability and world peace Knights and Willmott Instead they remain steeped in the business of academic credibility through publishing in prestigious journals and books within their own narrow discipline.

    This focus may give the impression that students of business or management knowledge are either critics or reformers, whereas there are other responses. There are traditionalists who have a romantic sense of a glorious past when the distinction between business education and practice was much more blurred because most of the educators were part-time or ex-business people. While these different approaches to business knowledge provided us with important background material for our study of the business school, industry—academic collaboration and knowledge transfer activity, I have concentrated here on reform of the business school and its relationship to management knowledge in theory and practice.

    But reform or criticism designed to bring about improvements in the business school and its external relations assumes different political stances: it can be conservative, liberal, or radical. Conservative reformers Several researchers who have been highly critical of business schools fall into the category of conservative reformers despite appearing at times to be closer to the critical management students or at least the radical reformers.

    This is because they seek to eradicate the weaknesses but retain the form through which the business school operates. Beer has reported on how business has been disappointed repeatedly with the absence of any help from academics in implementing new ideas.

    The reform that he is suggesting is simply to cajole academics to take responsibility for implementing their theories and prescriptions on the basis that it is their duty to provide managers with solutions to their problems. This managerial perspective broadly is taken for granted by conservative reformers but some believe the reform required is more substantial. Pfeffer has sought to render management and organizational knowledge more coherent and less fragmented—a condition that they attribute, perhaps exaggeratedly, to economics.

    You may want to think about replaying the tape of that event in your head and visualizing different endings that may have achieved the results that you were seeking. This is the key to evolution. By accepting what went wrong and being willing to admit your mistakes, eventually, through trial and error, you find what it takes to work around the problem rather than making it happen over and over again. As entrepreneurs, we have only a limited amount of time to execute in order to receive the results that we are trying to achieve, so time is of the essence. These three simple tactics will force you to evolve and adapt faster to internal and external circumstances.

    If we are able to jump into these tactics quickly and efficiently, we can steadily evolve and produce much faster results in our business. Entrepreneur Media, Inc. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site both directly and through our partners. The table below describes in more detail the data being collected. By giving your consent below, you are agreeing to the use of that data.

    For more information on our data policies, please visit our Cookie Policy. Revoke Consent Submit Consent. Here Are 3 Tactics. Next Article -- shares Add to Queue. Image credit: Shutterstock. Nick Ruiz. Guest Writer. January 18, 4 min read. Opinions expressed by Entrepreneur contributors are their own. More from Entrepreneur.


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