Leadership

To understand the role of chief knowledge officer (CKO) and the evolving practice of knowledge management (KM), the authors studied twenty CKOs in North America and Europe using face-to-face interviews, and a personality assessment questionnaire. All CKOs were first incumbents, most having been on the job less than two years. Appointed by CEOs more through intuition and instinct than through analysis or strategic logic, the CKOs had to discover and develop the CEO's implicit vision of how KM would make a difference. The CKOs agreed that knowledge is a necesssary and sustainable source of competitive advantage and that companies are not good at managing either explicit knowledge (expressed in words or numbers and shared as scientific formulas, codified procedures, or universal principles) or tacit knowledge (personal, experiential, context specific, and hard to formalize). CKOs have two principal design competencies: they are technologists (able to understand which technologies can contribute to capturing, storing, exploring, and sharing knowledge) and environmentalists (able to create social environments that stimulate and facilitate arranged and chance conversations or able to develop events and processes to encourage deliberate knowledge creation and exchange). As self-starters and risk takers, these CKOs are entrepreneurs who can strategize about transforming the corporation through KM and are driven by building something and seeing it through. By matching new ideas with the business needs of their constituencies, the CKOs are also consultants, trafficking in ideas that fit the corporation's knowledge vision. Breadth of career experience, familiarity with their organizations, and infectious enthusiasm for their mission are characteristic of these CKOs. The personality characteristics and competencies of these CKOs are unusual and distinctive. They need to be sociable and energetic yet tolerant and pragmatic. Finding the right person is at least as important as deciding to create the CKO role. Two critical success factors have emerged: the need for organizational slack time (for thinking, dreaming, talking, and selling) and high-level sponsorship beyond visible CEO support. The CKO must make senior executives and prominent line managers believe in KM -- a goal that is indivisible from winning and retaining personal trust.

A unifying framework for thinking about processes & #x2014;or sequences of tasks and activities & #x2014; that provides an integrated, dynamic picture of organizations and managerial behavior.

How can organizations make their negotiations more efficient and rewarding? Managers must recognize that negotiations inside the organization strongly influence the outcome of negotiations outside the organization. Using the example of Alta Systems, an information technology consulting services company, the author illustrates how internal and external negotiations processes are integrally linked and describes how managers can enhance negotiation results by improving those processes. Alta's difficult negotiations with an important client demonstrate the obstacles that arise when organizations are balancing internal and external negotiations: negotiators walk away from good deals because these do not match the organization's stated position or they agree to suboptimal deals because the organization views any agreement as better than no agreement; negotiating parties fail to explore underlying interests and see the other's perspective; negotiators function as advocates rather than as joint problem solvers; internal and external negotiations are compartmentalized; and the parties do not discuss the negotiations process. Managers of negotiators can take the following actions to overcome these obstacles: Choose wisely among options and alternatives. Use internal prenegotiations to gain agreement on the organization's best alternatives and to clarify the negotiator's role and authority in gathering information, sharing interests and alternatives, and committing to deals. Change the negotiator's role. Treat negotiators as "handymen" who undertake different tasks at different times; negotiators may serve, for example, as meeting facilitators or problem solvers as the need arises. Integrate internal and external negotiations. Institute flexible processes that survey the interests of all parties and encourage ongoing interaction among internal and external groups. Explicitly discuss the negotiations process. Encourage negotiators to set meeting agendas that focus on establishing the long-term plans, goals, and purposes of the negotiations. Communications within organizations too often sabotage the success of negotiations with suppliers, customers, and clients. By taking steps to align internal and external negotiations, managers can significantly increase the value that their organizations derive from any agreement.

Are Japanese companies ending their practices of lifetime employment and seniority-based pay, as the popular press has reported? Data from published Japanese surveys offer insights into three key issues: Are Japanese employment practices changing? While changes are taking place, they are limited to seniority-based pay and promotion; lifetime employment remains intact in most large companies. The seniority system is gradually being replaced by a new job performance-based pay system that companies are using to raise white-collar productivity. Most companies plan to retain the lifetime employment system, the benefits of which outweigh the costs. Why are employment practices changing? In the 1980s and 1990s, internal and external factors placed pressure on large firms to change the seniority system. Internal factors include falling profit margins, decreases in white-collar productivity, an aging workforce, and changes in employee attitudes toward work and the seniority system. External factors include the maturing of the Japanese economy, a decline in large Japanese companies' international competitive position, and increasing internationalization of Japanese companies' operations. What are the implications of changes? Given the trends in Japanese employment practices, Western competitors should expect the following: a continuation of Japanese companies' market growth strategy with minor adjustments; innovative products and services as well as marketing and partnering strategies coming from Japanese companies; a resurgence in Japanese firms' competitiveness and productivity levels; increasing opportunities to enter into Japanese keiretsu networks as suppliers; and continued fierce competition in local Asian markets and lower prices from Japanese competitors in more mature product sectors as they move them increasingly to overseas production. The examples of Honda, Fujitsu, and Sony, three firms that revitalized themselves through use of performance-based pay systems, product innovation, and new partnering strategies rather than through layoffs of core employees, suggest that while change will be gradual, most large companies will eventually follow in the same direction.

Commitment and competence are embedded in how each employee thinks about and does his or her work and in how a company organizes to get work done. It is, according to Dave Ulrich, a firm's only appreciable asset. As the need for intellectual capital increases, companies must find ways to ensure that it develops and grows. There are five tools for increasing competence in a firm, site, business, and plant. 1. Buy. The company goes outside to hire new talent. 2. Build. Managers invests in employee learning and training. 3. Borrow. A company hires consultants and forms partnerships with suppliers, customers, and vendors to share knowledge, create new knowledge, and bring in new ways to work. 4. Bounce. The company removes those employees who fail to change, learn, and adapt. 5. Bind. The firm finds ways to keep those workers it finds most valuable. Companies also need to foster employees who are not only competent but committed. Employees with too many demands and not enough resources to cope with those demands quickly burn out, become depressed, and lack commitment. A company can build commitment in three ways: 1. Reduce demand on employees by prioritizing work, focusing only on critical activities, and streamlining work processes. 2. Increase resources by giving employees control over their own work, establishing a vision for the company that creates excitement about work, providing ways for employees to work in teams, creating a culture of fun, compensating workers fairly, sharing information on the company's long-range strategy, helping employees cope with the demands on their time, providing new technologies, and training workers to use it. 3. Turn demands into resources by exploring how company policies may erode commitment, ensuring that new managers and workers are clear about expectations, understanding family commitments, and having employees participate in decision making. Only by fostering competence and commitment together can a company ensure the growth of intellectual capital, says the author.

As companies continue to downsize, they need to consider how to maintain their employees' morale in order to realize gains such as higher productivity and more flexibility. Those who survive layoffs and the managers who must implement those layoffs frequently exhibit reduced commitment. Their trust in the company may be destroyed and they may feel powerless in the wake of top management's actions. Mishra et al. propose a four-stage approach to downsizing, gleaned from interviews and surveys, that will retain workers' trust and sense of empowerment. First, the company should consider its decision to downsize only as a last resort, not to be taken lightly. Downsizing should be part of a clearly defined, long-term vision that fits into the company's overall strategic plan. Second, the company should consider all stakeholders' needs -- survivors, laid-off employees, the community, local and national press, and any affected government agencies. The company should form a cross-functional team to represent all stakeholders' interests, hire outside experts for outplacement and counseling, ensure that managers know how to deal with all questions, and give employees full information on the company's finances. Third, at the announcement stage, senior managers should explain why the downsizing is necessary and how it will help the firm in the long term. The fourth stage, implementation, is the most important. Management should communicate frequently and be open and honest. The company should do its best to ensure that laid-off employees are employed elsewhere and offer them generous benefits packages. It should seek remaining employees' ideas about restructuring work processes and provide training, particularly in new technologies, to work in the new environment. According to the authors, each stage, if well executed, will mitigate workers' mistrust and disempowerment and will help build a better company.

To retain loyal managers, companies must nurture an apolitical culture that places high priority on meeting career needs.

Making an explicit link between people’s personal needs and business goals can benefit both the company and its employees.

Most of the existing frameworks for strategic management assume an environment that is stable and simple. But technological advances and global changes have created dynamic, complex climates in which companies must operate. Chakravarthy examines the industry he calls Infocom & #8212; information providers, information processors, communication providers, and communication support. Technology has lowered many entry and mobility barriers among the industries; Microsoft is an example of a company that has exploited many strategic opportunities now available to Infocom companies. Chakravarthy compares and contrasts the popular frameworks for formulating competitive strategy. Porter’s framework assumes stable competitors, suppliers, and buyers. The company finds an appropriate strategy and erects the necessary barriers. But, says the author, technological change quickly makes the barriers obsolete, Infocom players have deep pockets, and government policy has a diminishing role. In the Hamel and Prahalad approach, the role of strategy is not to accommodate an existing industry structure but to change it. However, the author comments, Infocom is not evolving predictably, so benchmarking against its current structure is futile. The D’Aveni framework assumes that strategy must continually seek to change the rules of the game because companies will quickly retaliate against any new strategy. Chakravarthy points out that a firm cannot continuously move from one advantage to another. His proposed framework, applied to the Infocom industries, has three elements: Reconceptualizing strategy. Companies must repeat innovation; e.g., Canon’s successful launch of inkjet printers damaged its position in laser printers but was necessary to respond to competition. Companies must build customer networks around products or services. They must also be able to sense market flow, as Microsoft did when it found that its proprietary strategy for Microsoft Network would isolate it from the Internet. Sharing responsibility for strategy broadly within the firm. Employees must share a vision that is purposely vague but describes the firm’s guiding philosophy. Strategy must come from the bottom up and from small, focused units. Focusing on organization capabilities as the source of competitive advantage. Companies must leverage, strengthen, and diversify their competencies. In the end, according to Chakravarthy, “going with the flow” may be the best strategy for a firm in a turbulent environment. Rigid top-down strategies may be counterproductive. Firms should concentrate instead on growing distinctive competencies for the future.

Malone suggests that greater decentralization in business is a response to fundamental changes in the location of decision making; the changes are enabled by the dramatically decreasing costs of IT. A central issue for organizations in the twenty-first century, the author posits, will be how to balance top-down control with bottom-up empowerment. He proposes radically decentralized organizations such as the Internet as new models for organizing work. Malone examines the three stages in the relationship between lowered communication costs and the economics of decision-making structures. When communication costs are high, decision makers are independent and decentralized; for example, people in tribes, villages, and towns. When costs fall, decision makers become centralized, as in large, global corporations. As costs fall further, connected, decentralized decision makers can combine the best information from anywhere with their own local knowledge, energy, and creativity. Malone uses the history of retailing as an example. Mom and pop stores with unconnected, decentralized decision making are replaced by Wal-Mart type stores with connected, decentralized decision making via electronic ordering and inventory systems. The Internet is an even more decentralized form of retailing in which anyone can establish a global sales operation. The author sees three types of decision makers: cowboys, who are independent and decentralized and have low communication needs; commanders, who are centralized and, like military commanders, have high needs for communication; and cyber-cowboys, who are connected and decentralized and make independent decisions based on large amounts of information from electronic networks. Three IT-related factors determine where decision making in an organization occurs or is most desirable: (1) decision information & #8212; IT enables organizations to communicate information to people who have the knowledge, experience, and capabilities to make decisions; (2) trust & #8212; IT can increase trust by making remote decision makers more effective, controlling them, and socializing them; (3) motivation & #8212; IT enables people to make their own decisions about how to do their work. Autonomy makes them enjoy their work more. In radically decentralized organizations, Malone sees power emanating from the bottom rather than from the top. Who makes the decisions and who can overrule decisions will become crucial issues. In a growing knowledge-based economy, empowered decision makers enabled by new IT will have increasingly important roles.