Knowledge, Culture and

Innovation

Chapter 5

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Learning Objectives
• explain the importance of human resources
• explain what knowledge management is
• explain the importance of collaborative networks
• define culture and explain its determinants and why it
is important
• explain the components of the cultural web and the
nature of paradigms
• describe two typologies of cultural types
• explain the difference between creativity and
innovation

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Knowledge
Explicit knowledge is
knowledge whose meaning
is clearly stated, details of
which can be recorded and
stored, such as important
formulations, procedures
or ways of acting.

Implicit or tacit knowledge

is often unstated, based on
individual experience and
difficult to record and store.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Organizational Learning
Adaptive learning centres
on changing in response
to developments in the
business environment.

Generative learning
is about building new
competences or identifying
or creating opportunities
for leveraging existing
competences in new
competitive arenas.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Knowledge Management

Knowledge management is
primarily concerned with the
creation of new knowledge, the
storage and sharing of knowledge
and the control of knowledge.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Generations of Knowledge
Management
Generation
1
st
2nd 3rd
Generation Supply-Side KM Supply and Demand-Side KM Complex KM

Approaches Codification Strategies and Intellectual Innovation, organisational learning, Pattern recognition and storytelling
capital CoPs and holistic strategies

Researcher
McElroy (1999) Supply-Side KM Supply and Demand-Side KM N/A
McElroy (2000a; 2000b; 2003); Firestone Supply-Side KM Supply and Demand-Side KM and N/A
and McElroy (2003) Complexity
Skyrme (2001) Segmentation and Integration N/A
Deakin and Pratt (1999) Teams and Communities Knowledge Discovery Business Transformation
Knight and Howes (2002) Potential of new technologies How people know and learn Building individual productivity and
aligning to strategy
Koenig (2002) “Internet out of new technologies” Human Relations “Content and Reliability”

Laszlo and Laszlo (2002) Intellectual Capital Organisational Learning and Business Societal Learning, Ethical Social
Innovation Innovation, Evolutionary Development

Snowden (2002) Information for Decision Support The SECI Cycle Complexity

Tuomi (2002) Information Storage and Access Knowledge Construction Link Knowing and Action in Social
Systems

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Virtual Organizations

A virtual organization is a
network of linked businesses
that coordinate and integrate
their activities so effectively that
they give the appearance of a
single business organization.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Culture
Culture is ‘the collective
programming of the
mind which distinguishes
the members of one
organization from another’.
The culture of any group of people is
that set of beliefs, customs, practices
and ways of thinking that they have
come to share with each other through
being and working together. It is a set of
assumptions people simply accept
without question as they interact with
each other. At the visible level the
culture of a group of people takes the
form of ritual behaviour, symbols,
myths, stories, sounds and artefacts.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Determinants of Culture
• the philosophy of the organization’s founders, especially if it is
relatively young
• the nature of the activities in the business and the character of
the industry it competes in
• the nature of the interpersonal relationships and of industrial or
employee relationships
• the management style adopted and the types of control
mechanism, for example the extent to which management style is
autocratic or democratic
• the national or regional character of the areas in which the
organization’s activities are located (Schein, 1985). This, in turn,
can affect the power distance, which also influences culture
• the structure of the organization, particularly its ‘height’ and
‘width’
• the dependency the organization has on technology and the type
of technology employed, for example the growth of email has had
an influence on the culture of some organizations.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Why Culture is Important
• employee motivation
• the attractiveness of the organization as an
employer and hence the rate of staff
turnover
• employee morale and ‘goodwill’
• productivity and efficiency
• the quality of work
• the nature of the employee and industrial
relations
• the attitude of employees in the workplace
• innovation and creativity.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Paradigm

Stories Symbols

Rituals and Power

Paradigm
routines structures

Control Organisational
systems structures

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

Handy Culture Typologies
Power cultures are
common in small
entrepreneurial (owner-
managed)
companies and
in some notable larger
organizations with a
charismatic leader.
Task cultures are found in
organizations engaged in
activities of a non-repetitive
nature, often high value,
one-off tasks.
David Campbell, David Edgar & George Stonehouse
Business Strategy: an introduction
Role cultures are common
in traditional bureaucracies,
such as the civil service,
banks, insurance companies
and in some newer business
types such as call centres.
Person cultures can
be found in learned
professional societies, trade
unions, cooperatives, some
charities and some religious
organizations
 Miles and Snow
Defenders
These organizations tend to seek a competitive advantage in terms
of targeting niche markets through cost reduction and specialization.

Prospectors
These organizations enjoy the challenge of developing and
introducing new products to the marketplace.

Analysers
These organizations are ‘followers’ and are conservative in nature.

Reactors
Reactors are a bit like analysers in that they tend to follow rather than
innovate.
They differ from analysers in that they are less conservative and
sometimes behave impulsively, having failed to fully consider the
implications of their actions.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Innovation

Innovation is the commercialization

or exploitation of creativity and is
often represented by a degree of
novelty – novelty being relative to
the organization, the situation
or the process

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Reading
Allee V (1999), The art and practice of being revolutionary, Journal of Knowledge Management 3(2),
121-131
Barney, J (1991) Firm resources and sustained competitive advantage, Journal of Management,
17(1) 99-120
Bennet, A and Bennet, D. (2001) “Exploring Relationships in the Next Generation Knowledge
Organization” Knowledge and Innovation: Journal of the KMCI, 1, no.2, 91- 109.
Campbell, A and Goold, M (1987) Strategies and style. London: Basil Blackwell.
Campbell, A., Goold, M. and Alexander, M. (1994) Corporate level strategy. London: Wiley.
Chandler, A (1962) Strategy and structure. Cambridge, MA: MIT Press.
Goold, M. (1996). Parenting strategies for the mature business. Long Range Planning, June pp 395
Kay, J. (1993) Foundations of corporate success. Oxford: Oxford University Press.
Lynch, R. (1997) Corporate strategy. London: Pitman.
Skyrme, D., J. (1999) Knowledge Networking: Creating the Collaborative Enterprise.
Oxford:Butterworth-Heinemann.
Snowden, D., J. (2000) The ASHEN Model: an enabler of Action. Journal of Knowledge
Management. April 3 (7)
Stacey, R., D. (2001) Complex Responsive Processes in Organizations: Learning and Knowledge
Creation. London and New York: Routledge.
Starovic, D., & Marr, B. (2002) Understanding Corporate Value: managing and reporting intellectual
capital. Chartered Institute of Management Accountants.
Stewart, T. A. (1991) Brainpower: How Intellectual Capital is Becoming America's Most Important
Asset, Editorial, Fortune Magazine 3/6/1991
Teece, D. J., Pisano, G., & Shuen, A. (1997) Dynamic capabilities and strategic management.
Strategic Management Journal, 18(7), 509-533.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Review Questions

1. Explain what Knowledge management and talent

management are

2. Giving examples, explain what the cultural web is

3. Explain the difference between creativity and innovation

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction