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2 Phrases Business Leaders Use To Build Effective Knowledge-Based Companies

knowledge

2 Phrases Business Leaders Use To Build Effective Knowledge-Based Companies

Executives are faced with challenging economic conditions today. Leadership is the new competitive advantage and the organizations that embrace it will survive, while those that do not will find their organizations facing possible acquisition. Additionally, knowledge management has been a focal point of the executive span of control but has not been associated with leadership enough to make it an integral part of business success. One tool for executives to use when considering lessening the gaps between success and possible failure is to adopt leadership and become a leader. Thus, executives must understand that leadership can effectively lead organizational change to successfully implement the projects of knowledge management and, therefore, remain competitive.

I indicate that to improve knowledge management effectiveness, leaders, and for the sake of this study Leaders, act as change agents who have developed competencies to better deploy corporate strategy. Better use of this organizational factor mediates the relationship between leadership and knowledge management to include aspects that have not been considered by previous studies. I offer a new and unique approach that can be easily adopted in the workplace. I do this by thoroughly looking at the aspects of executive leadership explained in the article: leadership, corporate strategy, and knowledge management.

Corporate strategy includes four dimensions: analysis, pro-activeness, defensiveness, and futurity. Analysis strategy focuses on identifying the best solutions for the organizational problem. Leaders apply this strategy to create more innovative solutions for organizational problems. The pro-activeness strategy emphasizes the effectiveness of long-term decisions. Leaders employ this kind of strategy to develop a vision of adopting more comprehensive information about the future. Defensiveness strategy can also be applied by leaders by taking into account the objectives of the strategic implication that seeks to decrease organizational costs and redundancies. While leaders focus on implementing changes, a defensive strategy can be used to modify the current processes to enhance organizational efficiencies.

The fourth strategy, futurity, incorporates a proactive strategy that identifies the opportunities that are available, but not always addressed in the business, the global environment, and the political regulation changes. This strategy can be also enhanced by leaders as they adopt a strategic posture that inspires employees to identify better opportunities in both the internal and external environments.

Corporate strategy can be employed by leaders to effectively manage organizational knowledge. For example, an analysis strategy could enhance the knowledge creation process by identifying new opportunities in order to provide better alternatives for managers to make a more effective decision. Michael Cohen and Lee Sproull have indicated that the analysis strategy is highly associated with a company’s capacity to create new knowledge. In many ways, a proactive strategy could enhance knowledge transfer by developing interactions with both departmental units and the business environment.

When adopting a more futurity type strategy, leaders can enhance the knowledge utilization process, thereby developing guidelines for future pathways and determine future trends in the external environment and allocate their resources accordingly. Leaders can, therefore, exploit organizational knowledge through embracing the four strategic aspects of analysis, pro-activeness, defensiveness, and futurity.

How Executives Can Use These Findings?  

Executives can now see how leadership can cultivate a strong strategy, which will enable knowledge management processes within organizations. This is my experience of working with a team of top-level management consultants in the consulting industry. My experience says that a firm’s ability to enhance knowledge management can be highly affected when executives adopt leadership as the primary form of managing people, resources, and profitability. This article also adds to a relatively small body of literature and develops our understanding of the indirect contribution of leadership in improving knowledge management through better use of corporate strategy.

This study was designed to find if leaders indirectly influence knowledge management by affecting corporate strategy. Previous researchers repeatedly uncovered leadership’s direct impacts on knowledge management. This article articulates a different approach. I simply extended the literature by showing how leaders can also contribute to knowledge management by fostering an effective corporate strategy. This organizational factor coupled with leadership and knowledge management is presented as a new approach for executive implementation.

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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.

leaders

How Strong Is Your C-Suite Bullpen? Preparing The Next Generation Of Leaders.

About $350 billion a year is spent on leadership development, but many companies aren’t getting much bang out of their buck. Studies indicate that lots of senior executives don’t think the next wave is prepared well enough to assume larger leadership roles.

With many companies in a transitional phase, either due to people retiring or radical changes prompted by the COVID-19 pandemic, having ill-equipped leaders taking over can compound problems. Some businesses will suffer if they don’t make major changes in how they develop leaders, says Jennifer Mackin (www.jennifermackin.com), ForbesBook author of Leaders Deserve Better: A Leadership Development Revolution and a leader of two consulting firms.

“With baby-boomer leaders nearing retirement, there are fewer people in the workforce that are capable of doing the work required,” Mackin says. “Generation X has smaller numbers of people and hasn’t been invested in leadership development like boomers have.

“Many CEOs complain that their people aren’t ready to lead into the future. The source of the problem is leaders don’t know what to do differently to strengthen their people. A leader’s primary role is to coach and to create an environment that perpetually develops new leaders. There are ways they can refocus on that.”

One of those ways, Mackin says, is for executives to align business strategies with their people strategies. She offers these tips on how senior management can link the two and develop leaders in the process:

See the need to prioritize people strategies. Strategic plans, Mackin says, must address more than the financial component. “Too often CEOs and senior leaders put their people at the bottom of their strategic plans and fail to connect their business strategies with their people strategies,” Mackin says. “People are the most integral component of your strategies. If you decide, for example, that your organization will enter new markets, you have to connect that objective to your people. Maybe you will need 500 new people or 10 new leaders with certain skills to achieve your objective. How do you prepare for that?”

Know the key components of a people strategy. “Your people must fully understand the business plan for the next one to three years,” Mackin says. “Broad strategies for people have been identified to execute the business plan. There’s a plan for succession for all key roles. Gaps in knowledge, skills and abilities have been identified, and an overall development plan for the organization’s leaders addresses those gaps. Once you have the people strategy, companies can acquire the right talent based on well-defined roles, measure the outcomes, and adjust the plan as needed.”

Continue to scrutinize leadership readiness. These are questions CEOs must ask regarding where both their business and their leaders are today – and how to get them where they need to be tomorrow. “This must start with a plan that compares current state to future state,” Mackin says. “What are the gaps and how are you going to fill those with business and people strategies?”

Build a clear line of sight. Once the alignment is determined, Mackin says it must remain in sight for all leaders and their direct reports. “The leader knows where the organization is going, and direct reports understand their role in getting there,” Mackin says. “A clear line of sight means there is a connection between leaders’ objectives, the business strategy, and individual contributors’ work. It is also important for direct reports’ engagement and feeling of purpose that they understand exactly how their work and objectives add value to the business.”

“All senior leaders should be involved in the business strategy and people plans,” Mackin says. “It is critical that executives prioritize the development of leaders who can drive strategic change.”

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Jennifer Mackin (www.jennifermackin.com) is a ForbesBook author of Leaders Deserve Better: A Leadership Development Revolution, and a leader of two consulting firms – CEO of Oliver Group, Inc. and president and partner of Leadership Pipeline Institute US. As an author and speaker with over 25 years of consulting experience, she is a recognized leadership development influencer, having worked with CEOs, human resources managers, leadership development leaders, entrepreneurs, and other senior leaders in healthcare, hospitality, distribution, government, manufacturing, higher education, banking, financial services, and social services. She earned her BS in marketing from Indiana University and her MBA from Owen School of Management at Vanderbilt University.

information technology

Investing in Technology to Build Knowledge-Based Companies

Executives understand how knowledge management as facilitating organizational processes and activities uses information technology to organize existing information. Information technology plays a crucial role in creating, retrieving, storing and applying organizational knowledge stated by Maryam Alavi and Dorothy Leidner’s MIS Quarterly review.

Executives focus on individuals as the major source of knowledge and show how followers tie together so that they can affect the sharing, storage, transfer, and apply knowledge within organizations. Executives, therefore, see these connections, and the related shared knowledge and memory, as central to the effectiveness of knowledge management.

How Technology Matters?

Executives are well versed today on information technology and usually have a fleet of followers in this department that they can depend on. Sandy Weil, a financial executive, wanted one number when he left the office that determined his value at risk. His technology team delivered and came up with one number called VAR (Value At Risk). Wiel slept much better knowing what risk he faced while running one of the largest financial organizations in the world. He was controlling operational risk and inspiring employees to follow where he leads.

Technology, as one would imagine, is often associated with information and communication dispersed within companies. Considerable alignment between information technology and the knowledge-based view connects the two to develop and disseminate knowledge throughout the organization which, in turn, is an important factor of sustainable competitive advantage.

Executives agree with Robert Grant, who states that knowledge integration is one of the main reasons for the existence of companies. Furthermore, Andrew Gold, Arvind Malhotra, and Albert Segars suggest information technology as an important resource for strategic planning for knowledge integration. Olivier Caya posits that information technology enables knowledge integration by using three possible mechanisms:

1. Impersonal

2. Personal

3. Collective

Executives can use the impersonal mechanism to enact regulations, procedures, and rules aimed at coordinating intellectual capital within organizations. Information technology disseminates protocols among members and allows them to be knowledgeable of their progress toward meeting determined milestones stated in the strategic plans.

The personal mechanism is used by executives to vertically and horizontally exchange knowledge between employees and collective mechanism is used when information technology manifests itself as a synthesizer of ideas and knowledge acquired from multiple organizational members. Thus, information technology encourages people to embark on technological facilities, such as shared electronic workspaces, to provide new ideas and possible solutions for solving organizational problems. As a result, it is viewed that information technology plays a critical role in integrating knowledge and is therefore aligned with the knowledge-based view.

Executives can use information technology as a communication mechanism manifestation and deployment and decision-aid technology. For example, Hsin-Jung Hsieh argues that communication technology provides ways to enhance interactions among members and departments within organizations. This type of technology eliminates the barriers of organizational communications while improving the extent of knowledge sharing and access for all followers at various levels of the organization.

Thus, there is a strong correlation between communication technology and social capital view that sheds light on the development of relationships within organizations to aggregate human capital into social capital so as to provide further information and opportunities for all members. This subsequently creates valuable resources for an organization as a whole.

Furthermore, decision-aid technology develops cohesive infrastructures to store and retrieve the knowledge to enable followers in creating more innovative solutions to problems and managing operational risks. Ergo, information technology supports knowledge by enabling interactions and providing more comprehensive and effective solutions to solve organizational problems.

Unleashing the Power of Knowledge in Companies

Today, technology has changed the business world ten-fold. Every day there is an easier way to process, access, and disseminate information. Technology – now referred to as Information technology – is an internal resource that increasingly facilitates organizational communication and improves the search for knowledge. When executives have people in place to manage information technology, the organization can see increased revenues, better satisfaction by employees and customers, and most importantly enhance their own effectiveness as leaders.

The social capital view supports the idea that knowledge creation is highly dependent on developing organizational communications and interactions. Information technology enables organizations to overcome space constraints in communication, and promotes the depth and range of knowledge access and sharing within companies.  More specifically, communication technologies can be employed to enhance the conversations and knowledge exchanges between organizational members. Scholars such as Andrew Gold, Arvind Malhotra and Albert Segars argue that this knowledge shared through information technology could positively contribute to knowledge integration.

I also introduced executives to what the scholar Robert Grant describes using the knowledge-based view. Highlighting knowledge integration as a major reason for the existence of a company. Knowledge sharing itself can develop more innovative climates and facilitate knowledge creation in organizations. Thus, communication technologies can play a crucial role in improving knowledge creation.

Communication technology is an internal resource that develops and integrates organizational knowledge as the most strategic factor of competitiveness. As executives use expert systems for decision-making, technology becomes a decision-aid. As mentioned earlier, decision-aid technology can be also considered as a facilitator of the knowledge creation process by providing the essential infrastructures to store and retrieve organizational knowledge.

Executives agree with Shahnawaz Muhammed who highlights major functions for information technology and explains that information technology enhances learning and sharing knowledge by providing access to knowledge, and stimulates new ideas and knowledge generation, transfers an individual’s knowledge to other members and departments, and improves knowledge capturing, storing, and accumulating, aiming at achieving organizational goals. Bringing us to the conclusion that information tech has a positive association with knowledge management performance in companies.

In Conclusion

Standing on the shoulders of scholars before us, I indicate that information technology is a major factor for knowledge management success and supports the positive impact of information technology on knowledge management performance.

For executives, this article can portray a more detailed picture of the effects of information technology on knowledge management. Many organizations still implement knowledge management initiatives without sufficient consideration of their technological infrastructures.

When executives ensure the effectiveness of knowledge management projects they increase control and lesson operational risk. I also suggest that a firm’s ability to enhance knowledge management can be highly affected when executives implement information technology. Furthermore, I suggest that scholars take these ideas and continue to conduct research using executives as the focal point so that academic scholarship can meet the needs of managerial implications at the higher echelons of organizations worldwide.

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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.

women

2020’s TOP TEN WOMEN IN LOGISTICS

Women in logistics can be a rare find. That’s not to say women aren’t welcome in the typically male-dominated field; in fact, they often bring a valuable change of perspective.

However, many women simply do not choose careers in logistics. While there are many theories as to why this is, one thing remains for sure: Women in logistics are blazing new trails and helping to change the face of the industry with everything from initiatives that foster growth to environmental policies and even mentorship.

The following 10 women are no exception.

These Top Women in Logistics prove that women are valuable players in the logistics landscape. Here’s why.

Hannah Kain

Founder of ALOM, Hannah Kain grew her business from a single location to multiple facilities across the globe, including several new spots in 2019.

A proponent of environmental sustainability, Kain implemented programs within ALOM to reduce the company’s carbon footprint. Examples of this program include banning disposable plastic bottles across all facilities. Kain is also dedicated to workplace diversity–in fact, under her leadership, ALOM’s diversity spend was 46 percent in 2019 alone.

A champion of women entrepreneurs and business leaders, Kain served in the Danish Parliament in her 20s and currently serves as a mentor and community advocate, sitting on several boards including the Women’s Business Enterprise National Council (WBENC), where she is currently serving her second term.

She is passionate about education within the workplace and encouraging STEM education for children–especially girls–offering personally guided student tours of ALOM facilities and even hiring students as summer interns .

Katherina-Olivia Lacey

Katherina-Olivia Lacey is the co-founder and Chief Product Officer at the Singapore-based logistics technology company Quincus. From her modest beginnings, Katherina was working in a swimwear company managing inventory and doing marketing for the company, Lacey saw inefficiencies within the industry and set out to help solve them. Today, under the helm of Lacey, the company serves a global top two package delivery company and one of Asia’s largest airlines. Says nominator Kelley Prince, “Katherina is a north star for women within logistics or trying to break into it.”

Thanks in no small part to Lacey, Quincus has increased turnover by more than 1,000 percent. Today, Quincus has 70 staff and five location offices globally (India, Singapore, Malaysia, Indonesia, and UK). Within Quincus, Lacey has spearheaded such committees as Women@Quincus, a mentorship group designed to foster teamwork and mentorship among women employees. Lacey is credited with fostering an environment of teamwork, charity, growth and work/life balance that helps unleash camaraderie and teamwork among Quincus employees.

Ana Bailey

The Director of LeanCor Supply Chain Group Training and Education, Ana Bailey leads a team of instructional designers and trainers in the creation and implementation of online education programs. Bailey is also the primary consultant for Lean transformations, driving customer value and fostering an environment of excellence at LeanCor.

Bailey implemented a cost reduction plan at two-times expected targets, with a 97.5 percent contract rate attainment in 2019 at LeanCor Supply Chain. She has taken the helm of LeanCor’s training and education services and has taught classes at institutions such as Georgia Tech University and the University of Kentucky. Bailey has also lead client engagements with such businesses as GE Transportation, Lexmark, JC Penney and Amazon.com. A Six Sigma Master Black Belt, Bailey is bilingual in English and Spanish and holds a degree in Psychology.

Ashley Yentz

The Vice President of Supply Chain Solutions at LeanCor Supply Chain Group, Ashley Yentz works with clients to ensure everything from goal creation to supply-chain advancement.  Yentz is known for her innovative methods, working to challenge LeanCor’s corporate and social responsibility.

Under Yentz’s leadership, LeanCor has experienced a 10-20 percent improvement in on-time delivery and productivity, developing the company’s management system. Known as “a transparent, approachable leader,” Yentz manages a team of more than 10 remote leaders, still managing to make the team feel cohesive and included. Says her nominator “Some people teach, some people do. Ashley does both very, very well.”

Deanna MacDonald

CEO of BLOC (Blockchain Labs for Open Collaboration) and co-founder of BunkerTrace, Deanna MacDonald is a blockchain innovator. At the helm of BLOC, MacDonald has helped the company develop maritime energy and blockchain solutions. Today, at just four years old, BLOC is the leading platform of its kind.

At BunkerTrace, which MacDonald co-founded in 2019, her goal was to use a combination of synthetic DNA and blockchain to enhance marine fuel traceability, a goal which the company has achieved in just one year’s time. A respected public speaker and proponent of open-source technology, MacDonald uses her expertise in the blockchain field to educate on many aspects of the emerging field.

Michelle Kodrich

Senior Director of Global Logistics at Note Logistics, Michelle Kodrich works to provide clients with end-to-end supply chain solutions around the globe. The role, which Kodrich originated, is meant to help cultivate an international supply chain and strengthen relationships with domestic services.

Kodrich has served in the logistics industry for more than 25 years, managing international supply chains for the retail and grocery industries. She is experienced in ocean contracts and TMS management implementation, as well as planning domestic shipments and freight bill auditing. A truly versatile expert, Kodrich’s experience in all facets of the supply chain makes her the perfect fit for her newest endeavor at Note Logistics.

Judy R. McReynolds

Judy R. McReynolds is the chairman,  president, and CEO of the logistics company ArcBest, where she has risen through the ranks in her 20-plus year tenure. Since joining ArcBest in 1997, McReynolds has held the titles of Chairman of the Board of Directors, Senior Vice President and CFO & Treasurer.

In addition to her role at ArcBest, McReynolds has been active on many transportation industry boards, as well as educational and local boards in her Arkansas community. Today, McReynolds also serves at OG&E as both the Chair of the Compensation Committee and on the board’s executive committee.

Kristin Decas

CEO and Director of the Port of Hueneme in California, Kristin Decas has served at the only deep water harbor between Los Angeles and San Francisco since 2012.  Among her many accomplishments, Decas oversaw the port’s generation of more than $1 billion in annual economic impact and more than 10,200 direct and indirect jobs.

Recognized by the Trade Administration for her notable encouragement of economic development and for her dedicated service to a number of port and shipping committees, Decas has served on numerous panels, including the Freight Advisory Committee (NFAC), the U.S. Marine Transportation System National Advisory Council (MTSNAC) and on the Board of Directors for the American Association of Port Authorities (AAPA).

Elaine Forbes

At the recommendation of the Port Commission, San Francisco Mayor Edwin Lee appointed Elaine Forbes Executive Director of the Port in October 2016, making her (along with Port of Hueneme’s Kristin Decas) one of 12 women port directors in the United States.  Before Forbes’ appointment, she served as Deputy Director for Finance and Administration for the port for six years.

Forbes leads the port to responsibly manage the waterfront as the gateway to a world-class city and advances environmentally and financially sustainable maritime, recreational and economic opportunities to serve San Francisco, the Bay Area region and California.

Jare’ Buckley-Cox

Vice President of Walmart Fulfillment Services, Jare’ Buckley-Cox helped roll out the successful Walmart eCommerce program, which enables third-party sellers to sell through Walmart, allowing the retail giant to provide warehousing, packing and shipping for these vendors.

Prior to her tenure at Walmart, Buckley-Cox served at Amazon.com as Director of Logistics Shipping & Delivery Support, Product Director of Global Support Services, Technical Product Director, Post Purchase Delivery Experience and as the Director of Customer Service Operations for North America.

As the field of logistics becomes all the more important in this increasingly global economy, women remain a valuable resource for innovation, dedication and education. These logistics trailblazers and many more bring years of hard work and diverse experience to the table, all while shattering the glass ceiling along the way.

While the next generation of logistics leadership remains to be seen, we can only hope to see more women entering the logistics field, especially with such exemplary leaders for inspiration.

Knowledge management

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

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.

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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.

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.

corporate structure

How Consultants Can Help Companies Create a Sustainable Corporate Structure

At this point, you’re probably asking why corporate structure is so important. The answer is that a flexible structure is necessary to lead a global organization. This type of corporate structure is at the forefront of the knowledge base and has relative value in organizations throughout North America and the rest of the developed countries. When executives generate flexible corporate structures inspiring innovation and creativity, they will secure a foothold in an ever-changing hypercompetitive marketplace.

Corporate structure has been defined as a pattern by which organizations can divide their activities and tasks as well as control them to achieve higher degrees of coordination. [1] Corporate structure, therefore, refers to the bureaucratic division of labor accompanied by control and coordination between different tasks in order to develop communication within organizations. [2] [3]

Centralization and formalization are the most common structural aspects to examine corporate structure. [4] Thus, important milestones in corporate structure could include centralization and formalization, which inspire employees to take risk-related efforts and generate more innovative solutions. To examine centralization, executives should explore the degree of control and authority over decisions at hierarchical levels — that is, how much employees can undertake daily work operations without a supervisor and/or how much employees are encouraged to make their own decisions and/or how much employees need to refer to someone else when making decisions and/or how much employees need their superior’s approval before they do almost anything in their businesses.

Formalization, as another structural aspect, is operationally investigated through measuring the extent to which working relationships and decisions are assigned by formal language that represents official statements, policies, rules, and procedures — that is, how much rules and procedures are generally documented and/or how much relationships with our supervisors are on a formal or planned basis and/or how much employees can ignore the rules and reach informal agreements to handle some situations.

It is important for management consultants to understand that corporate structure can be reshaped by executives when they develop knowledge sharing and inspire employees to create new ideas for a better environment among business-units and departments. Two prominent scholars by the names of Sirkka Jarvenpaa and Sandy Staples maintain that the informal structure could facilitate new idea generation to build a more innovative climate within organizations. [5] Management consultants can particularly help executives to implement organizational changes that develop better collaboration among subordinates and managers.

Centralized versus decentralized decision making is also a topic that management consultants must deal with. Scholars found that more emphasis on formalized and mechanistic structures can negatively impact the executive’s ability to exert such changes. [6] On the contrary, a more decentralized and flexible structure may improve departmental and managerial interactions. The mechanical or centralization at the commanding level of leadership impairs the opportunity to develop relationships among managers, business units, and departments.

Management consultants should at least be aware that executives can reshape corporate structure to be more effective when the command center of organizations can disseminate information in a decentralized and organic way as opposed to the mechanical and centralized command center. Decentralized structures shift the power of decision-making to the lower levels and subsequently inspire organizational members to create new ideas and even implement them while centralized structures may negatively impact interdepartmental communications and inhibit knowledge exchange.

A recent empirical study conducted at Texas A&M University affirms that there is a negative impact of centralization on various knowledge management processes such as knowledge acquiring, creating, and sharing among both managers and departmental units. [7] On the contrary, a more decentralized and flexible structure may enable executives in improving departmental and managerial interactions that can lead to identifying best opportunities for investment that potentially leads to improve knowledge utilization processes for companies. Both management consultants and executives have acknowledged some form of relationship between corporate structure and the knowledge utilization process. Ergo, executives can positively contribute to knowledge management through building more decentralized structures within organizations.

The key take-away for management consultants is to facilitate knowledge management by developing a more flexible structure that is considered an essential source for developing relationships. Furthermore, scholars such as Brian Fugate, Theodore Stank and John Metzer have affirmed that knowledge management is a significant indicator of improving organizational performance. [8] Knowledge management can, in fact, improve organizational performance through increasing sales, customer satisfaction, learning opportunities, innovation and quality of products and services while still keeping the shareholder. With this view, executives to develop a flexible corporate structure that links knowledge management and firm performance together to serve the customer needs and become more profitable.

Therefore, if the corporate structure is not completely in favor of supporting knowledge management, executives cannot effectively manage organizational knowledge to improve performance and companies cannot be effective. Hence, the key kernel for management consultants is that corporate structure is a resource that enables organizations to solve problems and create value through improved performance and it is this point that will narrow the gaps of success and failure leading to more successful decision-making.

Moreover, flexible structures can directly impact leadership effectiveness. For example, leaders inspire followers to generate new solutions and a better environment. An empirical study by two prominent scholars by the names of Frank Walter and Heike Bruch in the University of St. Gallen provides evidence that a highly centralized structure has a negative impact on leadership practices, while decentralization positively contributes to executives in developing a more innovative climate. [9] These findings are enhanced by the crucial role of decentralized structures in facilitating the exchange of ideas and the implementation of more innovative solutions based on stipulating the power of decision-making at all levels of the organization.

Furthermore, highly formalized structures are more bureaucratic, and this negatively contributes to the effectiveness of leadership in changing the existing situations and creating a better environment.

In conclusion, management consultants are aware that organizational performance can be enhanced when executives reshape corporate structure to develop a more flexible corporate structure that provides open access to knowledge and information. Thus, this article suggests that flexible structures constitute the foundation of a supportive workplace to disseminate knowledge and subsequently enhance overall organizational performance. I also presented some very beneficial managerial implications for management consultants and industry leaders and simply extended the current literature by showing how management consultants can help executives to enhance leadership effectiveness by reshaping corporate structure.

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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.  

References 

[1] Bowditch, J.L., & Buono, A.F. (2000). A primer on organizational behavior, New York: John Wiley & Sons.

[2] Scott, W.R. (2003). Organizations: Rational, nature, and open systems, Upper Saddle River, NJ: Prentice Hall.

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