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Researchers Propose a Model to Better Manage Knowledge and Innovation in Multinational Corporations

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Archives, Executive Education, Global Trade Daily

Researchers Propose a Model to Better Manage Knowledge and Innovation in Multinational Corporations

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With a clear understanding of knowledge management, executives can make more effective managerial decisions. Knowledge management has been evaluated from various perspectives. This variation may differ because knowledge management is understood in many different ways and therefore different scholars focus on different aspects of it and offer several options of managerial application. These perspectives are discussed below.

Taking a Technological Perspective

Executives know that they can take a technological perspective. In this case, the executive understands how knowledge management as facilitating organizational processes and activities uses information technology to organize existing information. Executives have found that knowledge management embraces information technology to convert individual knowledge into valuable resources for their organization. Executives focus on individuals as the major source of knowledge and show how followers tie together so that they can effectively share the storage, transfer, and application of knowledge within organizations. Executives, therefore, see these connections, and the related shared knowledge and memory, as central to the effectiveness of knowledge management.

Taking an Economic Perspective

Executives agree with Doyle McCarthy, who sees society as a product of knowledge. Defining culture as various forms of knowledge and symbols that make up an organization’s culture. However, knowledge is a by-product of culture and knowledge’s role in guiding and facilitating people’s action is key to executive decision-making. Four scholars by the names of Bernard Marr, Oliver Gupta, Stephen Pike, and Goran Roos define knowledge management as “a set of activities and processes aimed at creating value through generating and applying intellectual capital.”

Executives direct practices that create value from intangible organizational resources. For executives, it is clear that the objective of managing knowledge is to add value to organizations. The focus here is that executives consider the fact a firm’s knowledge is positively associated with its outcomes.

Taking a Process Perspective

The process perspective focuses on knowledge flows that executives use through embracing the processes of knowledge management for strategic management decision-making. Managing knowledge is not new, scholars have considered the various processes involved. Executives can look at three-step processes of knowledge accumulation, integration, and reconfiguration. Jang-Hwan Lee and Young-Gul Kim’s model for managing knowledge takes a strategic process-oriented approach and is relevant to executive leadership. Executives build a climate of openness for individuals to exchange ideas. Knowledge is accumulated by creating a new approach to gathering, evaluating, and disseminating information throughout the organizations.

Executives inspire people to create new ideas and develop effective mechanisms to acquire knowledge from various sources such as suppliers, customers, business partners, and competitors. This is similar to a value-chain approach. Executives need to first support this approach for the model to work because they play a strategic role in expanding the knowledge accumulation through applying incentives as mechanisms to develop a more innovative climate and managing effective tools to acquire knowledge from external sources.

Executives then integrate knowledge internally to enhance the effectiveness and efficiencies in various systems and processes, as well as to be more responsive to market changes.

Accumulated knowledge is synthesized to produce higher quality outcomes. Thus, knowledge integration focuses on monitoring and controlling knowledge management practices, evaluating the effectiveness of current knowledge, defining and recognizing core knowledge areas, coordinating expert opinions, sharing organizational knowledge, and scanning for new knowledge to keep the quality of their product or services continuously improving.

Executives can promote knowledge integration by creating expert groups or steering committees to enhance knowledge quality and evaluate knowledge assets. Follower’s diversity of skills and interpersonal relations that is based on trust and reciprocity can improve the performance of group cohesiveness.

Therefore, in the process of knowledge integration, knowledge enters organizational processes and provides valuable contributions to products and services. Executives as leaders steering the organizational strategy facilitate this process, by undertaking initiatives that improve knowledge transfer, thus enhancing the performance of employees and the implementation of effective changes to maintain the quality of products and services. The burden of success when the effective implementation of knowledge integration is concerned is heavily dependent on the capabilities of the organization’s leaders.

Executives must also curtail knowledge within organizations. This knowledge needs to be reconfigured to meet environmental changes and new challenges. At the same time, it should not be leaked to the competition in any shape or form unless agreed upon by senior executives. When executives agree to share knowledge with other organizations in the environment, studies have shown that that knowledge is often difficult to share externally. One reason is that other organizations have too much pride to accept knowledge or are apprehensive to expose themselves to the competition.

Therefore, executives may lack the required capabilities to interact with other organizations, or distrust sharing their knowledge. In addition, just the notion of creating an expert group or steering committee may be shortsighted because such groups may not have sufficient diversity to comprehend knowledge acquired from external sources. On the other hand, executives are aware of networking with business partners is a key activity for organizations to enhance knowledge exchange.

Networking is a critical concern for leaders in this process is developing alliances with partners in external environments. Executives and their expert groups and/or steering committees are the ones who can make final decisions about developing alliances with business partners.   Figure 1 depicts this model of knowledge management.

In Conclusion

There are some executives that like to look at academic journals but unfortunately, the crossover literature has not reached them enough. This article attempts to blend scholarly concepts with real-world applications. This article introduces an applicable model to evaluate knowledge management success. Also, this article provides evidence that knowledge management is used in corporate infrastructure for strategic decision-making.

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Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.

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Archives, Commentary, Global Trade Daily

Should Companies Rush Headlong into Permanent Remote Work?

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New research from Stanford shows 42% of US workers are working from home full-time. After a successful transition for COVID-19, more and more tech companies are allowing their employees to work remotely for the foreseeable future. Twitter recently announced that most of their employees may continue working remotely as long as they want to. And 4,000 Nationwide Insurance employees recently became permanent telecommuters.

The benefits of an all-remote workforce are considerable and fairly easy to measure. But are we losing something equally important by ditching the office and in-person work?

The four benefits of all-remote work

When real estate startup Culdesac announced they were giving up their San Francisco headquarters, co-founder Ryan Johnson tweeted: “Remote work is going great for us.” Google, Facebook, and Zillow recently told their employees that they could continue to work from home until 2021. Google recently abandoned more than two million square feet of planned office space. “Our bias against working from home has been completely exploded,” Dan Spaulding, Zillow’s chief people officer, said. Zillow is “not seeing any discernible drop in productivity.”

Here are four reasons companies are ditching their offices for all-remote workforces.

1. Offices are expensive

According to commercial real estate firm Cushman and Wakefield, companies have been pushing more workers into less office space for years. Packing everyone in came at the cost of minimizing distractions, which is consistently the top driver of employees’ ability to focus on their work.

Not only that, but until there’s an effective treatment and/or vaccine, these uber-dense offices aren’t going to cut it. Spacious offices with thermometers, hand-sanitizer stations, phone sanitizer stations, new HVAC systems, touchless systems, and more they need to be safe are going to cost even more.

As we enter a COVID-led recession, Kate Lister, president of consulting firm Global Workplace Analytics, predicts that investors are going to insist that firms cut costs. Letting go of office space accomplishes this without cutting headcount.

2. Offices are distracting

Going all-remote not only saves companies money on office space, but also can lead to fewer distractions and more focus for workers.

A few stats:

–The average company sees a 10% to 43% increase in productivity after going all-remote.

–In a recent survey, 54% of workers said their productivity had improved since working from home full-time.

–64% of workers said their work quality has improved.

3. Commutes are terrible

Americans spend 30 billion hours commuting every year. Long commutes are one of the main reasons workers say they want to work from home. Research shows longer commutes are associated with obesity, high cholesterol, high blood pressure, back and neck pain, divorce, depression, death, political disengagement, poverty, absenteeism, lower productivity, and even pregnancy complications. Long commutes also exacerbate pollution and climate change.

4. Talent is distributed

Firms that hire remotely can access far more talent and may be able to offer lower salaries. Currently, Facebook is paying employees based on their geography’s cost of living. It may also make it easier for teams to meet their Diversity, Equity, and Inclusion goals. For example, it’s easier to employ people with disabilities when you don’t have to worry about office accessibility. Companies with greater gender diversity are 15% more likely to be high performers, according to one study. Companies with greater ethnic diversity are 35% more likely.

Drawbacks to all-remote

Remote work isn’t without its drawbacks, including loneliness and boredom. In addition, we found that many workers are having more meetings and working longer hours after going remote. There’s evidence that full-time remote workers have a harder time problem solving and being creative than their in-office peers. Many contend that it’s easy to overlook the value of the spontaneous ideas and networking that in-person coworking facilitates.

“Many companies are jumping into ‘remote-first’ too head-on,” said Can Duruk, Product Manager and co-writer of The Margins newsletter. “Once people burn through the accrued social capital you will see productivity drop as relationships decay, new hires not gelling well, etc.”

Futurists have long predicted that as telecommuting became technically feasible, firms and workers would abandon high-cost cities. Research shows that physical co-location is still valuable enough to justify the rents.

One interesting criticism of all-remote teams is that trust and social capital are hard to establish and maintain over distance. As trust and social capital are measurably associated with higher performance, will we see performance dip as they erode?

“We are operating under the assumption things won’t deteriorate and we are making these sweeping changes without much data,” Can said.

More broadly, some fear that widespread adoption of the all-remote model will finally lead to the long-predicted de-urbanization. A move away from large cities would have negative impacts on the environment. Urbanites use less electricity, drive less, and spend about $200-$400 less on electricity each year compared with suburban dwellers.

Plus, people who live in cities have more access to health care, employment, and education.

Alternative models to all-on-site and all-remote work

Workers tend to be happiest and most productive when they have the freedom to live where they want and choose how to organize their time.

This is in line with a Gallup poll showing that just 40% of Americans who are currently working from home are excited to go back to working in their office full-time. Nearly 60% would prefer to work remotely “as much as possible” going forward.

Within a couple of years, Kate Lister from Global Workforce Analytics predicts that 30% of workers will work from home a few days per week.

“I’m partial to what Stripe is doing,” Can from The Margins said. “Treat remote as a hub to position it to succeed, ensure people are available in the same time zone. Seems gradual enough to be low-risk, discrete enough to measure and tangible enough to support.”

The major downside to the split-office model happens when some workers are working from home full-time. Those workers are going to have a different experience than workers who come into the office, even occasionally. Remote workers may have trouble establishing relationships, getting put on the right projects, and getting promoted.

“It’s important that we are conscious of this situation if we want our high performers, wherever they may be, to be recognized for their excellent work,” writes CIO Contributor Dan Mangot. “Similarly, we need to make sure that those who are struggling, get the support they need so they can continue to be valuable members of our organizations.”

Going forward

While the benefits of going all-in on remote work are considerable, it’s also worth considering the drawbacks. For many workers and many companies, a staggered or split-office approach may work best.

To learn how to transition some workers back into office work, check out 6 tips for transitioning into a split office setup.

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Archives, Global Trade Daily, Software, Special Reports

Don’t Get Caught Off Guard by Expired Contracts

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Contracts are key to mitigate risk, secure discounts, and acquire services. Your procurement teams work hard to negotiate contracts that enforce the most beneficial terms for your company, and your AP team takes careful measures to ensure each invoice is paid on time. However, one section of the contract that’s often overlooked by finance teams is the expiration date. Surely your supplier will let you know when it’s time to renegotiate, and someone’s tracking it somewhere, right?

The truth is, in many organizations, the expiration date of a contract is often completely unknown. An expired contract can have serious ramifications to your business functions and could cost you a lot if you’re unaware of its pending arrival. Below are a few scenarios that can happen if you’re caught off guard by expired contracts.

Where are our contractors?

If you fall out of contract with your contractors, the first thing you might notice is that they simply don’t show up. This may not be a huge issue on temporary projects such as landscaping, but if you’re relying on them for long-term IT support, this could be a big issue: A few weeks of contract renegotiations can slow down your business significantly. Staying ahead of contract expirations allows you to renegotiate terms before they expire, to ensure there aren’t any gaps or delays in your projects.

Hmm, this seems more expensive than usual

If your supplier contracts expire, they’re no longer obligated to honor the price you negotiated. They can suddenly begin to charge their market rate, which is likely substantially higher than the contracted rate. This would be an unwelcome surprise for any finance team, especially if it’s after you’ve already purchased the goods (and perhaps even used them as components within your product). After a contract is expired, you lose all your leverage to find an alternate supplier, and the cost of your goods can rise exponentially. Avoid this supply chain nightmare by knowing in advance if you need to renegotiate your prices.

I can’t afford my new subscription price, but can I afford not to have it?

Contracts often include a clause that limits cost increases upon renewal, typically around 3-5% or covers the cost of inflation. However, if the contract expires, this clause will no longer be honored. Let’s say your business is using an ERP or CRM software on a six-year contract. During that timeframe, the software company raised its annual fee from $400K to $3.5M. Unfortunately for your company, you didn’t renegotiate the contract before expiration, and you now have zero leverage to negotiate a better price. Even worse, the cost of switching may be equally high, so it doesn’t make sense to look for alternative software. Your company has no choice but to pony up the money in order to keep your business functioning on all cylinders.

The above scenarios would be tricky for any business to avoid. With so many contracts with so many different suppliers, it can seem impossible to be aware of each upcoming expiration date. However, AppZen’s Contract Audit notifies you of all of your upcoming expirations (and coupled with AP Audit, you can also be confident that your contract terms are reflected on each invoice too). Thanks to AppZen, you’ll be notified with enough time required to make a decision on alternative suppliers, saving you costly mistakes, and keeping your business and supply chain running at 100% efficiency.

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David Wishinsky is a Senior Product Marketing Manager at AppZen.

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5 Reasons Company Leaders Resist Needed Change – Even During This Crisis

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The thought of change can be scary, even more so during the type of crisis we’re experiencing now with the COVID-19 pandemic. Although there are business leaders who are already implementing change in response to the challenging economic and operational landscape, many others are not.

“Sometimes the writing is on the wall and organizations are triggered to change,” says Edwin Bosso, Founder and CEO of Myrtle Consulting Group and the ForbesBooks author of 6,000 Dreams: The Leader’s Guide To A Successful Business Transformation Journey. “In fact, members of the organization often are keenly aware that something needs to be done. However, despite that, management does not act, and the cost of inertia can be high.”

According to Bosso, there are five reasons why leaders resist change and, as a consequence, struggle to move their company forward:

They confuse important versus urgent. Leaders sometimes confuse the terms important and urgent. “Important issues are those that do not necessarily have an explicit deadline, like urgent issues, but can effectively have some impact, large or small, on a business,” Bosso says. “The confusion sets in when owners and managers spend too much time putting out fires rather than planning. For example, the company may know that it is important to upgrade its operations. But it doesn’t become urgent until later on when the company looks at the output of its competitors that have completed transformation projects and have become a lot more cost-competitive.”

They lack courage/leadership abilities. Successfully initiating and executing a change process involves numerous leadership skills. “It can be intimidating taking on such a challenge that, to some leaders, may seem like moving a mountain,” Bosso says. “Others are better prepared to take risks, confront reality, envision a better way, make plans, and then act on those plans to lead a change.”

They misalign the incentives. The incentive to change or transform organizations can be misaligned with the incentives of people who are in charge of leading those transformations. “Misalignment of personal incentives can cause us not to act, even when we know it’s the best thing for the company,” Bosso says. “When we are in line for a promotion and higher pay, we certainly don’t want to take on risks that can potentially work against us.”

They lack support and/or resources. Not being afforded the requisite tools or the consensus for necessary transformation can leave a leader feeling powerless. “This is a set of obstacles that many leaders run into,” Bosso says. “The powerlessness can come from the lack of company means, organizational backing, human capital and resources to support the cost of a transformation. After a while, they run out of energy, or time, to make the case.”

They lack a method. It’s not uncommon for leaders to know the difference between where their company is and where it could be, but they don’t know how to proceed. “In such situations, leaders often freeze up and put off the impending need to change, or they approach it through trial and error,” Bosso says. “Having a methodology is beneficial when taking on such an effort. Some leaders take the time and effort to learn what needs to be done, while others bring in experienced people to provide a method for leading a smooth and successful transformation.”

According to Bosso, leaders must understand that there will never be a perfect time for change, but also that often the right change only happens if they force the issue.

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Edwin Bosso, the ForbesBooks author of 6,000 Dreams: The Leader’s Guide To A Successful Business Transformation Journey, is the founder/CEO of Myrtle Consulting Group (www.myrtlegroup.com). Bosso specializes in operations improvement and change management, and his project history includes work for major brands such as Heineken, Texas Petrochemicals, T-Mobile, Anheuser-Busch, Rohm and Haas, Campbells Soup Company, Kellogg’s and Morton Salt. A wide range of assignments has taken him throughout Asia, Europe, and North America. He completed his undergraduate education at The Hague Polytechnic in the Netherlands and earned an MBA from Rice University in Houston.

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How Global Leaders Can Manage Knowledge, Risk, and Talent Management

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Risk management, according to Karl Wiig, Chairman of Knowledge Research Institute, is an operational approach to represent knowledge management. But, in this case, it seeks to apply organizational knowledge in order to satisfy and exceed employees’ expectations and improve talent well-being.

All executives need to be aware of how to better control risk management, which coincides with talent well-being. To do this, they should understand the mediating role of knowledge management. This may be the answer executives need but may also lack the fundamental fortitude necessary to be an all-encompassing approach to predict talent well-being within companies. Due to this limitation, the focus of this article is based upon the critical role of risk management which allows a rich basis for understanding the mechanisms by which talent well-being is influenced.

Executives see knowledge management as an employee’s capabilities in securing benefits received by joining in risk management. Therefore, talent well-being has been determined as resources accessible through knowledge management to enhance executive operational risk management. One good example, in which Victor Sino, a director of Operational Risk Management at a prominent large organization states that operational risk is a risk of loss due to failed talent well-being, processes, systems, and an external event. Some of these can be controlled by executives and others are risks that have to be factored into strategic decision-making.

Companies were assumed to be defenseless entities against threats, and opportunities happened in business environments that were serendipitous versus planned and organized. Organizational risk management was developed to offset problems before they occur and to adjust or ship resources accordingly in the event of a threat. Executives must recognize problems, and work hard to overcome them. First, executives will need to adopt knowledge management to identify the employee’s individual learning needs and become more inspired them to put extra effort into their work. This can also improve talent well-being through acquiring additional knowledge and developing better relationships with them, and providing newer solutions and creating a better workplace for them.

Operational risk of large corporations is at risk if they can be easily imitated by the competition. Therefore, firm-specific knowledge must be guarded and not shared with the competition. Any leak of such information may expose the organization and increase the operational risk. Thus, the ownership of knowledge, or what I would prefer to call knowledge management, falls under the operational risk category and must be managed and also monitored due to fluctuations in the dynamic economic environment of today. This can improve talent well-being through fostering the dynamic relationships among employees and departments, but most importantly, through satisfying employee needs. When executives have people in place to manage knowledge and embrace risk management, the organization can see better satisfaction with the most talented employees, and most importantly, enhance talent well-being.

Integrating Knowledge Management and Talent Management to Retain the Most Talented Employees

I suggest that both important factors of knowledge management and talent management constitute the foundation of a supportive workplace to reduce operational risk – two major concerns of global leaders today. Talent management is essential for business growth and prosperity while knowledge management, if not embraced, can lead to operational risk. Knowledge management can help organizations identify their inefficiencies in each process, and subsequently, recover them on an instantaneous basis, enabling executives to prevent further operational risk. Adding more manageable control of internal resources and reducing operational risk. Thus, when executives ensure the effectiveness of knowledge management they increase control and lessen operational risk.

Knowledge management utilizes modifications in order to efficiently and effectively use organizational resources, decrease costs, and control operational risk. Knowledge management also develops cohesive infrastructures to store and retrieve the knowledge to enable employees in creating more innovative solutions to problems and managing operational risks. My explanation of this is clearly within the executive span of control and potentially limits operational risk. I designed an approach for executives in large corporations to use talent management coupled with very prominent and useful construct of knowledge management so that the managerial implication is sound, justified, and operational to eliminate the gaps and serve the most talented employees in the organization that exist in the spaces between the lines of the organization.

Knowledge management enhances a firm’s capabilities to decrease the risk of imitation of organizational capabilities by competitors thus, managing operational risk. In doing this, executives that adopt knowledge management develop organizational communications aimed at providing valuable resources for organizations. They also enhance knowledge sharing among organizational members and stipulate knowledge to be shared around the organization. This process can potentially build an effective learning company in which the most talented employees can develop both personally and professionally. Knowledge management could, therefore, positively impact the most talented employee’s retention, through meeting the goals of personal development.

Additionally, executives that employ knowledge management create new ideas and knowledge for innovation through motivating the most talented employees to more innovatively solve organizational problems. Executives today realize that knowledge is the one of most strategic factors for organizations from a competitive standpoint. Knowledge management is a necessary precursor to creating new knowledge and ideas within organizations. The creation of new knowledge is a process and can be essential to identify the most talented employees’ needs and also recognize changes happening in the business environment. Through knowledge management, executives can contribute to identify and meet the most talented employees’ needs which lies at the focal point of executive success.

In conclusion, I suggest that executives embrace knowledge management. Knowledge management influences some of the spans of control of executive responsibility. My primary focus is on one factor (i.e. talent management) but there are many more important components of the managerial function that can be enhanced when knowledge management is embraced. The key here is that there are positive effects of knowledge management on talent management.

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Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.

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The Design and Implementation of Effective Knowledge Management System in Multinational Corporations

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Executives agree with Doyle McCarthy, who sees society as a product of knowledge. [1] Defining culture as various forms of knowledge and symbols that make up an organization’s culture. However, knowledge is a by-product of culture and knowledge’s role in guiding and facilitating people’s action is key to executive decision-making.

Knowledge also creates values, thereby fulfilling the strategic functions of “producing and guiding social action, of integrating social organizations, of protecting the identity of individuals and groups, of legitimatizing both actions and authorities, and of serving as an ideology for individuals, groups, classes, and entire nations”. [2] In addition, Thomas Beckman explains that knowledge management is “the formalization of and access to experience, knowledge and expertise that create new capabilities, enable superior performance, encourages innovation and enhances customer value,” [3]  and Bernard Marr and his colleagues define knowledge management as a set of activities and processes aimed at creating value through generating and applying intellectual capital.

[4] Moreover, knowledge management has also been regarded as a “conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance”. [5] Executives direct practices that create value from intangible organizational resources. For executives, it is clear that the objective of managing knowledge is to add value to organizations. The focus here is that executives consider the fact a firm’s knowledge is positively associated with its outcomes. This article portrays a more detailed picture of the effects of leadership and organizational factors on knowledge management performance that have been mentioned but not placed in a model in the past. Executives can use the model proposed in this article to improve knowledge management performance in companies.

What Can Executives Take From Previous Academic Research?

Executives that manage knowledge and use it as an important driving force for business success find their organization to be more competitive and on the cutting edge. However, knowledge management implementation in organizations is determined by a set of critical success factors, one of which is the strategic dimension of leadership. For now, executives can develop conducive organizational climates that foster collaboration and organizational learning in which knowledge, as a driver of improved performance, is shared and exploited. Academicians point out that if leaders do not adequately support knowledge dissemination and creation through various mechanisms such as rewards or recognition for employees who create new ideas or share their knowledge with others, knowledge management cannot be successful.

Furthermore, it is safe to say that knowledge management effectiveness can be enhanced today with the use of information technology. Information technology can play a critical role in the success of knowledge management.

For instance, a scholar in Universiti Teknologi Malaysia (UTM) by the name of Kuan Yew Wong highlights the importance of information technology in facilitating knowledge flow and communication. [6] Ying-Jung Yeh and his colleagues at the National Taiwan University of Science and Technology and National Chung Cheng University indicate that the effectiveness of knowledge management implementation is positively associated with using information technology and setting up useful software and systems to enhance strategic decision-making. [7] Effective leaders can, therefore, develop information technology through employing IT professionals and allocating more budgetary resources to share and utilize knowledge within organizations.

Moreover, it is clear that executives around the globe realize that they play a critical role to achieve the best climate and for implementing knowledge management that creates learning and growing the organization. Engaging followers and getting them to participate in leadership activities is an important part of knowledge management practices. Scholars subsequently suggest that success is also dependent upon how executives formulated their organization’s mission, vision, and strategy.

The key is for executives to inculcate an effective strategy, culture and structure so that information can be found and used instantaneously. The fact that executives steer the strategic direction of organizations is indicative of empowering people and making them more responsive to the constant changes in technology, economic fluctuations, and other pertinent and vita changes that occur on a day-to-day basis.

Executives Are Now Introduced to the Proposed Model

Based on an integrated framework of the above ideas and scholarly research, I depict and applicable and reliable model for executives as Figure 1. This framework of the model highlights a relationship between knowledge management, leadership, strategy, culture, structure and information technology. I show the relationships in Figure 1. In Figure 1, leadership has a positive impact on knowledge management which leads to higher knowledge management performance. And finally, better strategy, better culture, better structure and better information technology lead to better  performance.

In Conclusion

This article blends scholarly concepts with real world application and investigates how scholarly research can be applied in the organizational boardroom. Also, scholars see that I expand upon the subject matter of organizational factors. Through introducing a more comprehensive model for implementation, I add to the current and extant literature. In particular, I suggest that if these factors are not completely in favor of supporting knowledge management, organizations cannot effectively implement knowledge management projects and may become obsolete, taken over, or acquired.

__________________________________________________________________

Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.

References

[1] McCarthy, E.D. (1996). Knowledge as Culture: The New Sociology of Knowledge, New York: Routledge.

[2] Strasser, H., & Kleiner, M. (1998).  Knowledge as Culture: The New Sociology of Knowledge, European Sociological Review, 14(3), 315-318.

[3] Beckman, T.J. (1999). The Current State of Knowledge Management. In J. Liebowitz, (Eds.), Knowledge Management Handbook, New York: CRC Press.

[4] Marr, B., Gupta, O., Roos, G., & Pike, S. (2003). Intellectual Capital and Knowledge Management Effectiveness. Management Decision, 41(8), 771-781.

[5] O’Dell C., & Grayson C.J. (1998). If only we knew what we know: identification and transfer of international best practices, New York: Free Press.

[6] Wong, K.Y. (2005). Critical Success Factors for Implementing Knowledge Management in Small and Medium Enterprises. Industrial Management & Data Systems, 105(3), 261-279.

[7] Yeh, Y.J., Lai, S.Q., & Ho, C.T. (2006). Knowledge management enabler: a case study. Industrial Management & Data Systems, 106(6), 793-810.

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How Small Business Should Think About Financing

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It’s no secret that over half of small businesses close their doors within the first five years. One of the critical problems that often occur has little to do with the innovation, ingenuity, or work ethic of the small business owners themselves, but rather the lack of access to sufficient capital to cover the ebbs and flows of their operation and its associated costs. 

Scaling any idea or enterprise, to me, is less often about “entrepreneurship” —and other catchy terms we can print on a business card— and more about meeting the demands of others, like payroll and customer expectations. Simply put: small business owners need capital resources— they need cash. 

Historically, small businesses have had limited options to access capital: savings, friends and family, credit cards, traditional bank loans, or the occasional SBA loan. Enter the financial crisis of 2008-2009, which ushered in a new regulatory environment that contracted these historic capital resources, thereby creating the market-driven need and demand for non-traditional banking options.

Consequently, we find ourselves operating in a new era, one in which enterprising nonbank funders have brought novel and different capital products to the small business market. This has been largely accomplished through an ambitious mix of fintech and financial innovation. These previously unavailable financing options give small businesses more resources to consider than ever before. Now their next step is to explore them and consider how their small business might decide on the best option for their specific needs. 

As we contemplate these innovations, here’s a quick list of some of the best financing options available to small businesses:

Business Term Loans: Best for businesses looking for working capital, equipment purchases, or to purchase inventory or other fixed assets. For short-term loans, it can often be matched to a specific project and repaid to coincide with the completion of that project in 6 to 12 months. For longer-term loans, the repayment can be stretched out to 3 to 10 years, but these often require higher levels of collateral coverage or a personal guaranty by the business owner. 

Pros: Great product for larger one-time investments with targeted cash loans flow that payments can be matched. 

Cons: Larger dollar amounts and a longer payback term will require increased time, energy (think: bank meetings and interviews), and documentation. 

Equipment Financing: Best for one-off purchases like restaurant equipment and machinery. 

Pros: no upfront spend; if the business owner has impaired credit the fact an asset is involved as collateral can make it easier vs. purchasing the equipment; and tax-deductible.

Cons: Overall cost is usually more expensive in the long-run; cost inclusive of fees if the lease is terminated early can be substantial; and must take into account all terms and conditions that can be complicated (who handles and addresses a break-down in the equipment? etc).

Small Business Administration (SBA) Loan: Best for business owners who need capital for a variety of longer-term business expenses. It is government guaranteed so the process can be daunting and is processed through a bank that has an SBA loan program. 

Pros: Cost and longer-term repayment; great product for owner-occupied real estate.  

Cons: Requirements are strict; process is time-consuming (60 to 180 days); high upfront fees; and requires strong personal credit scores.


Business Line of Credit (“LoC”): Best for businesses with more volatile sales and cash flow. Flexibility to drawdown and repay based on the needs of your business.  Often secured by accounts receivable and inventory. Some LoC’s offered by FinTech operators do not require business collateral but do require a personal guaranty.  

Pros: Can access quickly (assuming facility is in place) to solve urgent issues or expenses; and great for managing working capital needs and the business’ short-term cash flow needs.  

Cons: Reporting can be much more intensive vs. other products available; upfront and ongoing fees can be expensive, especially if the LOC is rarely drawn down.


Revenue-Based Financing: This is a financing option where the repayment schedule is tied to the future revenue of the business. The genesis of the product is that the funder operates as more of a partner and is taking some level of “equity-risk”. If the revenue decreases or the business fails, the repayment is either stretched out or in the case the business fails the funder has no recourse. Small businesses can utilize this product for project financing, working capital, growth investments, or short-term needs. 

Pros: Quick access; repayment risk mirrors the revenue; no business or personal recourse except in the case of fraud.  

Cons: Products are generally 12 months or less; more expensive given level of risk with limited recourse; reporting can be intensive as changes to payment schedules requires bank and financial verification.

Invoice Factoring: The business can turn its unpaid invoices into immediate cash. The invoice factoring company collects directly from the customers and distributes capital to the business, net of its fee. 

Pros: good for managing cash flow; typically a short-term financing product (30 to 90 days).  

Cons: cost can be expensive, especially if repaid much quicker than anticipated; can be disruptive notifying customers to change their payment instructions to the factoring company; requires technology integration or higher level of reporting and the business’ customers will be dealing directly with your funder if they delay payment – not you as the business owner.  

Angel Investors/ Venture Capital: Best for small businesses who want to scale quickly. 

Pros: entrepreneurial background provides increased insights and foresight vs. dealing with alternative finance providers, banks, or the government; larger investor network to leverage for additional funds or additional business; and capital remains in the business (vs. interest costs). 

Cons: Higher rates of returns expected (typically at least 5x their investment); requires giving up equity in the business; process will be intensive; typically reserved for high visibility, disruptive companies pursuing large addressable markets on a national or global scale; and will require operating agreement additions to governance to protect their investment in the case of underperformance.

Bootstrapping: Best for businesses with principals that have savings or expendable income who want to preserve equity ownership and cash in the business. 

Pros: maintain ownership position and keeps all cash generated either in the business or available for dividends. 

Cons: Growth limited to the owner’s cash position; risk missing market opportunity because thinly capitalized; challenging if a short-term need requires more cash than available.

While the pros and cons of this list provide a guide to financing in 2019, any financing decision should ultimately come down to your assessment of the cash flows of the business (today and in the near term), demonstrated capacity to handle credit, costs versus profit opportunity (positive ROI), and repayment thresholds. 

The good news is, enabling technology allows small business owners to access various forms of capital quickly and efficiently. There is no day like today to explore options to fund entrepreneurial dreams. 

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Vincent Ney is a founder and CEO of Expansion Capital Group, a business dedicated to serving American small businesses by providing access to capital and other resources so they can grow and achieve their definition of success. Since inception, ECG has connected over 12,000 small businesses nationwide to approximately $350 million in capital 

visionary
Archives, Global Trade Daily, Special Reports

Are You A Visionary? 6 Traits Every Strong Vision Shares.

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There’s a reason many of the most successful businesses in America – Apple, Amazon and others – had a visionary leader behind them, propelling them to achieve their goals at the highest level.

“A vision pushes people not just to do more, but to do more than they think they are capable of,” says Oleg Konovalov (www.olegkonovalov.com), a global thought leader and consultant who has worked with Fortune 500 companies and is author of the new book Leaderology.

Yet, even though everyone does a lot of talking about the importance of vision, he says, it’s not easy to fully grasp just what it is.

“I’ve discussed vision with CEOs of big companies, serial entrepreneurs, creators of unique software, and many others,” Konovalov says. “Every single person with whom I have spoken viewed vision differently. But in the course of all these discussions I discovered that there were some properties of a strong vision that remained constant.”

Vision reflects the highest purpose of leadership. A leader’s vision should include actual benefits for those affected by the vision, such as employees, customers, the leaders themselves, employees’ families and society at large. “A main stimulus of vision is people and the care of their needs,” he says. “If a vision is not formed around people and their needs, then it is not vision but personal ambition.”

Vision doesn’t lead to dead ends. A vision is always scalable and should show multiple potentials for expansion, Konovalov says. “But to be able to scale the vision you should maintain an appropriate cognitive distance from it,” he says. “This allows you to see the broader picture while keeping the important details in sight. Stand too close and you see the details, but lose the whole picture. Stand too far away and you lose the important details from which the vision is created.”

Vision reveals a path to success. As you pursue your vision, watch for the signs and clues that will help lead you to success. “They will be easy to follow if the vision is strong,” Konovalov says. “Those signs are always around in different forms – words of encouragement, expressions of real need from strangers, and answers to critical questions coming from unexpected perspectives.” Paying attention to such signs helps people spot opportunities while crafting the most effective path to success, he says.

Vision means taking on responsibility. If you’re the person with a vision, you are taking on a responsibility that will have an impact on people’s lives.  “And the greater the vision is, the greater the responsibility,” Konovalov says. “But this huge responsibility also comes with incredible opportunities, the kind of opportunities available only to pioneers. It may be intimidating to take on all that responsibility, but it will reward you in return.”

Vision should be easy to understand. “Vision involves elegant thinking about complicated things,” Konovalov says. But that doesn’t mean the vision itself should be so complex that everyone is left puzzling over what you’re saying. Just the opposite. “Great vision is genuinely easy to understand,” he says. “The simpler the vision is in its core meaning, the easier it can be shared with employees, customers, and partners.”

Vision generates excitement. A person with a vision isn’t nonchalant about it. Strong vision is always accompanied by excitement. “Actually, vision is a strong emotion itself,” Konovalov says. “If someone tells you about his great vision and he sounds ho-hum about it, then most likely he is lying to himself and others. Such a person might have a goal, but they don’t have a vision.”

Vision is a great leadership ability and success instrument, Konovalov says.

“Vision defines and explains why and where effort should be focused,” he says. “And while vision is normally created by a single person, it quickly becomes the property of many, and that’s important.

“No one can accomplish something great on his or her own. Vision is what attracts the people needed to take what you want to accomplish and turn it into a reality.”

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Oleg Konovalov (www.olegkonovalov.com) is a thought leader, author, business educator and consultant with over 25 years of experience operating businesses and consulting Fortune 500 companies internationally. His latest book is Leaderology. His other books are Corporate Superpower, Organisational Anatomy and Hidden Russia. Konovalov received his doctoral degree from the Durham University Business School. He is a visiting lecturer at a number of business schools, a Forbes contributor and high in demand speaker at major conferences around the world.

 

management
Archives, Commentary, Global Trade Daily

5 Traits Today’s Leaders Need to Revolutionize Their Management Style

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The rapid rate of change and innovation brought about by the digital age is putting many large corporations in peril as they realize they are in an “adapt-or-die” era.

But for a business to change, its leadership must be willing to change as well, and that doesn’t always happen, says Oleg Konovalov (www.olegkonovalov.com), a global thought leader and consultant who has worked with Fortune 500 companies and is the author of the new book Leaderology.

“Old strategies and approaches are not sufficient anymore,” Konovalov says. “Unfortunately, we are stuck in the Dark Ages of management, in which we fall back on the old ways of leading people, rooted in the patterns, metrics and expectations of the past. We are in desperate need of a management revolution.”

Put simply, he says, a leader’s hesitation to learn and adapt to new realities kills any chance of spotting opportunities and being innovative.

“We have memories of such giants as Kodak and Borders,” Konovalov says. “Both used to be on the Fortune 500 list, but passed away because they were stuck in the old paradigm of thinking. A dogmatic way of thinking and acting won’t get anyone far in business.”

Konovolav says over the years he has learned numerous lessons about what separates extraordinary leaders from the ordinary. Here are just five of the traits true leaders possess:

They are involved with their teams. Managers who just monitor from afar what employees are doing tend to think they are good leaders as long as everything seems to be going well. “This is wrong,” Konovalov says. “Are you giving input to the team? Are you present when things are going well or only if things go poorly? The amount of effort and energy the leader puts into the work defines the actual role and status of the leader.”

They are a coach and receptive learner at the same time. “This is a good combination because, on the one hand, you help people to grow by sharing your expertise,” Konovolav says. “On the other hand, not learning from other people is equal to ignoring them.” In the best scenario, he says, there will be experts on the team from whom the leader and everyone else can learn.

They understand leadership is not a dictatorship. People in leadership positions possess power and influence, but they should use that power to serve people, Konovalov says. “If you do that, you’ll be paid back threefold with respect, support and loyalty,” he says. “Make your leadership worth following. Be an example by working for others, rather than acting like you’re king of the mountain in a kids’ game.”

They over-deliver on promises. When true leaders pledge to do something, they are able to calculate the risk and understand the effort needed to achieve what they have said they will do. “Real leaders know they will be judged against actual deeds and fulfilled promises,” Konovalov says. “Unfulfilled promises work against them and people who counted on them will leave. Promising too much is for incompetent leaders.”

They know that winners breed winners. It’s a leader’s duty to help people feel like winners even in small achievements, and to convince them of their ability to succeed despite past failure, Konovalov says. “People trained to win will win,” he says. “People trained to fail will fail.”

“The modern leader needs to combine meticulous planning with flexibility,” Konovalov says. “The wrong decisions and actions can lead to the whole organization losing sight of customer needs as well as quality, harming the long-term sustainability of the organization.

“Making the right decision means thinking of more than the company. It means considering the values and needs of customers and employees as well.”

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Oleg Konovalov (www.olegkonovalov.com) is a thought leader, author, business educator and consultant with over 25 years of experience operating businesses and consulting Fortune 500 companies internationally. His latest book is Leaderology. His other books are Corporate Superpower, Organisational Anatomy and Hidden Russia. Konovalov received his doctoral degree from the Durham University Business School. He is a visiting lecturer at a number of business schools, a Forbes contributor and high in demand speaker at major conferences around the world.

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Archives, Commentary, Global Trade Daily

Your Business Has 99 Problems and Communication is All Of Them.

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Businesses face a multitude of vexing situations every day.

Sometimes these are quickly remedied, such as a missed phone call that must be rescheduled, or an unhappy customer who needs to be soothed. At other times, there’s a total breakdown and turmoil erupts, as in the recent GM strike where 50,000 auto workers walked out, venting their anger over a number of decisions by the company.

But, small or large, of minor importance or potentially ruinous, every cause for concern that a business encounters originates from the same place.

“All problems are communication problems,” says Bill Higgs (culturecodechampionspodcast.com), an authority on corporate culture and author of the upcoming book Culture Code Champions: 7 Steps to Scale & Succeed in Your Business. 

“How well you communicate is tied to your organization’s culture, which raises the question: What is your current culture costing you?”

Higgs says it’s common in the business world to be in a situation where someone asks or tells you to do something, you think you understand what they want, but when it’s done, it’s not right.

“When you both review what happened, you realize there was a communication breakdown at the outset,” he says.

Higgs recommends a few ways businesses can improve communications – and in the process avoid everything from minor mishaps to major disputes:

Seek and value input from everyone. A lot of rework could be avoided if leaders in an organization would empower their people to speak up if they see a problem, Higgs says. “Often, people remain silent even when they see something that does not seem right,” he says. “Why is that? I believe these problems happen because a person might notice something seems wrong, but he or she isn’t comfortable challenging someone who they see as more expert on the subject than them or who has more authority.” That’s why it’s important to foster an organization-wide culture where people feel comfortable challenging things, no matter who they are or who they are challenging. That way you increase the odds that things will be done right the first time.

Cross-train people so they better understand what others do. When employees have no idea about their co-workers’ areas of expertise, work slows down, as though everyone on the team is speaking a different language. “You want to get your people to broaden their knowledge and expand the scope of what they normally do in their own jobs,” Higgs says. As people learn more, they become more efficient and, for example, could handle questions from a vendor without bringing in other members of the team, saving everyone’s time. Higgs says cross-training often can take place when people have downtime, but if that’s not possible, it may be necessary to schedule time to make it happen.

Bust silos. Many organizations group people together by function. Marketing people work in the marketing department, finance people in the finance department, and so forth. Departments also are often separated physically. “This can create a number of problems and inefficiencies,” Higgs says. “For example, it can lead to lots of rework because silos are not conducive to communication.” Other problems silos cause include competition rather than collaboration among teams, and finger-pointing and blame-shifting when things go awry. He suggests that, instead of separating people by their functions, group them together in teams that are working on the same projects.

“Don’t let your people shut themselves off in their offices or workspaces, and don’t create such a hierarchy that people can communicate only through pre-approved channels,” Higgs says. “Effective teamwork requires good communication – and lots of it.”

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Bill Higgs, an authority on corporate culture, is the author of the upcoming book Culture Code Champions: 7 Steps to Scale & Succeed in Your Business. He recently launched the Culture Code Champions podcast (culturecodechampionspodcast.com). Higgs is also retired CEO of Mustang Engineering Inc., which he and two partners started in Houston, Texas in 1987 to design and build offshore oil platforms. Over the next 20 years, they grew the company from their initial $15,000 investment and three people to a billion-dollar company with 6,500 people worldwide; since then, it has grown to a $2 billion company with more than 12,000 people. Higgs is a distinguished 1974 graduate (top 5 percent academically) of the United States Military Academy at West Point and runner up for a Rhodes scholarship.