Most Effective Corporate Strategies You'll Ever Need to Achieve Greatness in Knowledge Management

Written by Mostafa Sayyadi, Senior Management Consultant 

One scholar that is well known in the Academy of Management, one of the largest leadership and management organizations in the world by the name of Senge highlights the importance of knowledge for organizations. Senge says that successful organizations enhance their competitiveness by focusing on learning. Another scholar with over 40 books by the name of Drucker, comments that “the productivity of knowledge and knowledge workers will not be the only competitive factor in the world economy. It is, however, likely to become the decisive factor, at least for most industries in the developed countries.” (p.17). Executives read Drucker’s work because it is directly applied to managerial decision making.

The fact remains that executives around the globe are beginning to be aware that knowledge management is a multidisciplinary area drawing on various disciplines such as information systems, organizational behavior, strategic management and psychology, and aims to create and sustain competitive performance.

Developing an Effective Corporate Strategy

Executives are familiar with Chandler, one of the prominent strategic management scholars along with Henry Mintzberg. Chandler perceives corporate strategy as determining a firm’s long-term goals, and then allocating capabilities and adapting actions and activities in a fashion that can achieve them in both an effective and efficient way. Another scholar, Andrew, describes strategy as a pattern of decisions made by organizations to determine goals and develop plans and policies necessary for accomplishing them. So, strategy is a pattern of decisions and plans, which are directed at interacting with the external and internal environment and effectively and efficiently allocating capabilities to achieve organizational objectives and increase profitability. Chandler started a mindset that encouraged executives to investigate scholarly work to improve profitability, enhance customer service, increase employee satisfaction, and improve shareholder value.

A firm’s strategy primarily aims to develop goals and plans to restructure unclear and vague situations into a set of organizationally resolvable problems. As a result, corporate strategies are formed to efficiently deploy capabilities and interact with environments----both internal and external. Thus, the knowledge based view provides organizations a social community to enhance competitive advantage by utilizing and creating new ideas and storing knowledge that can be tapped into at the right place and time. Many large companies have plans going well into the future. Long term goals spanning five to fifteen years. While short-term goals are more tactical and are just as important.

Competitive advantage is sought by many executives, for instance, Grant concentrates on knowledge application, and argues that firms are entities that must apply knowledge in order to enhance competitive advantage. An example of this is when Jamie Diamond left Citigroup to head up J.P. Morgan in the 2013, he was paid 20 million dollars to not take any people with him to J. P. Morgan for three years. Thus, knowledge creation and application manifest themselves in people, organizations, systems, and processes and should be guarded like gold in the Federal Reserve Bank.

Executives view corporate strategy is a sum of objectives, plans, and procedures designed to efficiently and effectively upgrade organizational capabilities and interact with their environment more effectively. In particular, strategy defines a pattern to deploy organizational capabilities and interact with both the internal and the external environment. Executives, therefore, manage their knowledge assets to create new ideas and knowledge aimed at achieving organizational objectives. First and foremost, just as one organization is holding knowledge back from competitors they are following suit. Knowledge could be the most important component of success in this ever changing technological environment of today. Thus, corporate strategy is an internal resource affecting knowledge and in most cases, knowledge is the most strategic factor of competitive advantage.

Executives can take a look at six aspects of strategic formulation based upon a prominent scholar by the name of Venkatraman: analysis, proactiveness, defensiveness, futurity, riskiness and aggressiveness. Executives are aware that two strategic dimensions----aggressiveness and riskiness were separate and did not fall under the same strategic dimension as the other four. Corporate strategy, therefore, mainly encompasses four aspects: analysis, proactiveness, defensiveness, and futurity. Thus, riskiness and aggressiveness, or what I would prefer to call assertiveness, fall under the operational risk category and must be managed but also monitored due to fluctuations in the dynamic  economic environment of today.

So how can you as an executive used these four dimensions? Venkatraman provides a blueprint to follow:

• Analysis refers to the degree to which the roots of problems are analyzed to provide the best solutions, which ultimately results in a more efficient allocation of resources to solve problems and also achieve organizational goals.
• Futurity is reflected in the degree to which the strategic decision-making process takes a two way approach----an emphasis on both long-term effectiveness and shorter-term efficiency concurrently. 
• Defensiveness, which recommends undertaking defensive behaviours that manifest themselves in enhancing efficiency and in cutting costs while maintaining continuous budget-analysis and break-even points.
• Proactiveness is defined as the extent to which a firm continuously searches for emerging opportunities in its business environment, and then actively participates in these opportunities by responding to changing trends.

Executives Can Now Use an Effective Corporate Strategy

When executives use analysis strategy, they aim to create more knowledge. They, in fact, find the best solution using a problematic search of various options. Strategic analysis actually stimulates organizations to apply information systems in their decision-making processes in order to investigate various alternatives and options.  Engaging in analysis strategy provides executives with a high degree of freedom for subordinates to explore their own new ideas and solutions to organizational opportunities while solving problems. For instance, executives analyse strategic milestones to meet the goals of the employee intellectual stimulation and personal development. This provides new and more innovative solutions for organizational problems as they arise. Furthermore, executives inculcate human capital into social capital to exert change at the organizational level.

Executives also develop futurity strategy to implement a series of basic research aimed at developing a more comprehensive vision for the future by incorporating upcoming trends in the business environment. Executives use analysis and futurity to expand the growth opportunities available to organizations that may be challenging but important to close the gap between success and failure. Executives must also take an offensive approach at times and in this case they employ a defensive strategy. A defensive strategy utilizes modifications in order to efficiently and effectively use organizational resources, decrease costs, and control operational risk.

Finally, proactiveness is a strategy element used by executives who take a proactive approach to search for better positions in the business environment. In this case, executives use proactiveness strategy to find new opportunities and proactively responding to current challenges in external environments, they are also enhancing their span of control. Therefore, a proactiveness strategy can provide a higher degree of knowledge through developing interactions with external environments.

In Conclusion

Standing on the shoulders of scholars before us, I indicate that corporate strategy is a major factor for knowledge management success and support the positive impact of corporate strategy on knowledge management. This article suggests that corporate strategy constitutes the foundation of a supportive workplace to improve knowledge management and reduce operational risk. In fact, I suggest that by channeling knowledge management efforts into organizational constructs, employing a supportive strategic platform within organizations, that executives will continue to prosper.