Knowledge Management and Organizational Learning - Coursework Example

KNOWLEDGE MANAGEMENT AND ORGANIZATIONAL LEARNING Student’s name Code & Course Professor’s name University City Date Knowledge Management and Organizational Learning Introduction For a long time, scientists, philosophers and experts in various disciplines searched for new information, with the aim of acquiring, creating and communicating the knowledge for improvement and re-utilization. However, it is not until relatively recent times that knowledge management as a distinct body of knowledge emerged. The basis of knowledge management is that, just like the human inability to utilize the full range of brain power, organizations cannot utilize the full range of information they have. Organizations, therefore, use Knowledge management as a way of either acquiring or making available useful information and knowledge for effective use in influencing organizational performance. Knowledge management transforms individual knowledge into organization or company knowledge (Rasula, et al., 2012) It is important to understand the meaning of knowledge to get a better insight into this subject. Many refer to knowledge as a personal belief that on can justify. There are two types of knowledge, tacit and explicit. Tacit knowledge is that which is in the minds of people that they cannot articulate (Rasula, et al., 2012). Much of the knowledge that exists is tacit. Scientists develop it through studies and trial and error. Explicit knowledge is that which exists in the form of words or arranged data, sentences or documents. The role of knowledge management is to explain tacit knowledge and present it to others as explicit for use. Knowledge today, is just as, perhaps even more important, that other traditional organizational resources like labor, capital and land (Rasula, et al., 2012). Often, the organization does not know what it knows. There is a lot of knowledge that is in various business processes, activities, and relationships. Some of the knowledge is developed and through various processes improved over time.The goal of organization management is the continuous improvement of this knowledge to advance company interests (Iberdola, 2015). Economies today compete on a basis of innovation, with companies constantly looking to strengthen the link between knowledge and innovation (Gloet & Samson, 2013; Rasula, et al., 2012). Knowledge management helps the organization use the range of information they have a competitive advantage. Organizational learning complements knowledge management. Organizational learning is the process of how the organization uses the information learned through knowledge management. Knowledge management focuses on the content, or the knowledge itself that the organization creates, possesses and eventually uses for a competitive advantage in the market (Gloet & Samson, 2013). One can better understand the difference between knowledge management and organizational learning as one being the goal of the other. Organizational learning is the goal of knowledge management; it accumulates knowledge. But accumulated knowledge does not help the organization (Gloet, 2011). There is a need to improve the organization continuously, through the identification, implementation and continuous institutionalization of improvements. In today’s globalized and highly competitive world, knowledge management and organizational learning must not just be a specialized activity, but has to be an integral part of the behavior of any contemporary organization (Gloet & Samson, 2013). Organizational learning, however, has its disadvantages. In some cases, the objectives of learning at the group or organizational levels might clash. The tension between learning objectives at different levels of the organization might impact the quality of the learning process. Speed of learning is also another important factor (Gloet & Samson, 2013). Slow learning means the organization understands all the possible dimensions. However, fast learning can sometimes be the difference in being the first to market, but at the risk of negative response from the customers. Traditionally, literature has failed to find the link between knowledge management and innovation (Gloet & Samdon, 2012). The success of knowledge management initiatives also depends on which department or section of the organization drives the program. For instance, is it an IT project, one driven by the management, or one embedded into the culture of the organization (Gloet, 2011). This paper uses an analysis of British Airways and the strategic decisions it has made through the years taking it to the top of the aviation industry both in the UK and the world. Through the examination of the case of British Airways, the paper aims at demonstrating the use of knowledge management and the necessity of organizational learning from the information collected from knowledge management to the creation of a competitive advantage in the market. British Airways British Airways is one of the oldest airlines in the world, and perhaps one of the most successful. One can trace the start of British Airways to the beginnings of civil aviation after the First World War. Several incidences have shaped the progress of the airline into what it is today. In 1960, the formation of the air transport and licensing board meant many small airlines came into play. In 1980, the civil aviation act passed enabling the government to sell its shares in British Airways. With the constraints of government ownership removed, British Airways later merged with British Caledonian in July. Today, British Airways is one of the largest in the world in terms of destinations, fleet size and international flight. It is also part of some of the most prestigious aviation networks like the One World Alliance. Over the years, British Airways has faced different situations that have interrupted its operations. It has, however, always coem out the other end stronger and a major market player. It is the company’s use of knowledge management and organizational learning that has always kept it a market leader. Knowledge Management/Environment: The airline industry The airline market is one of the most competitive in the world. With the return to economic health for most economies, the financial outlook for most airlines has been good in the past few years. In 2013, the demand for air transport remained high. According to the Internationa Air Transport Association, in the first four months of 2014 the load factor for the airlines reached 78 per cent (Bombadier, 2014). 2014 market the second year of improved airline profitability following positive economic growth, improved confidence in business and stability in fuel prices. IATA records in 2013 showed a profit margin of 10.6 billion, with a forecasted profit margin of 18 billion dollars in 2014 (Bombadier, 2014). Over the next 20 years, the world GDP projections place the growth at a compound annual growth rate of 3.3 percent.. Changes in airline traffic result from changes in the ability of the population to travel. Middle class spending is especially expected to increase. Asia Pacific, China and India regions, identified as emerging economies, together account for a considerable amount of the world’s middle-class today (Bombadier 2014). Three situations determine the need for organizational learning to stay afloat in the industry. First, the state of the industry in 2015 continues to be one of rapid growth, but consistency in profitability is difficult. A lot of the growth recorded and reported by the IATA is as a result of the activities of low-cost carriers (PWC 2015). These account for about a quarter of the market share, but their influence has increased considerably in the emerging markets. Almost all the players in the industry turn profits, from the manufacturers of airplanes and engines to the travel agents. However, the airlines, the crucial link that does the actual movement of passengers, struggles to break even. These special conditions mean that airlines must concentrate on increasing top line growth since productivity depends on revenue almost exclusively (PWC 2015). With improvements in technology, customers get accustomed to getting the best in everything they pay for. Manufacturers have improved quality, efficiency and user friendliness of all products, large and small (PWC, 2015). For instance, in the last decade or so, cars have improved tremendously in quality and efficiency. Air travel has, to the frustration of many, hardly followed this trend (Trillium Software, 2011). This presents a problem for the airlines. Changing the physical nature of the aircraft is expensive, and the returns will take time to manifest. Changing the customer experience is easier but more expensive. The only way to strike a balance is a wholesale change in organizational behavior, especially for the frontline employee (PWC, 2015). The airline industry is perhaps one of only a few industries where there have been price reductions in the past few years. The competition on price and quality faces airlines even as they strive for efficiency. This calls for major improvements in the organizational culture, operational models and work practice. Many airlines with enough funds are continually improving the efficiency of their fleet through modernization (Trillium Software, 2011). These changes have to come with organizational structure. Many of the structures that legacy carriers like British Airways have in place were put in place years ago when the fleets and aircraft were still too small. Changes in aircraft makes these systems more complex and cumbersome, and more expensive to operate (PWC, 2015). Intellectual and social capital Capital does not have to be the actual physical assets. Intellectual and social capital are intangible assets. Intellectual capital refers to the intellectual information, while social capital refers to information about the social structure of the company (Ahmadi 2012). Intellectual and social capital complements the physical assets of a company, improving its value. Over the years, British Airways often gathers information pertaining to the intellectual and social state of the company in order to improve performance (Trillium Software, 2011). British airways is one of the leading carriers in terms of fleet and international destinations, naturally, they collect information about the activities of the company. However, an important step that British Airways does is the continuous auditing of the information to improve future performance (Trillium Software, 2011). Because the company relies of data across numerous processes, making sure the quality is high enough can be a challenge. The outcomes from the data gathered can only be as successful as the quality of the data. For instance, the business intelligence used for planning of such processes as forecasting demand, planning routes and predicting capacity and pricing must be of high quality (Trillium Software, 2011). The management of marketing and customer services also requires accurate and timely reviews of both single customers and various customer groups or families. When staff are able to see the totality of the relationship between British Airways and the customer, they can provide more specialized care. After a thorough audit, the company realized that legacy information about its past was in various formats and had various levels of cleanliness. The company had in place data cleansing practices, but many of them were local and could only be implemented for one locality. There was no single holistic, enterprise approach for the whole business (Frost, 2014). Another important observation was that the management had no ways of judging the quality of the data they used in their most important business decisions. This is one of the main reasons why knowledge management programs fail (Frost, 2014). They, therefore, could not track any changes in quality over the long term. The company therefore hired experts to streamline the knowledge management procedures across the organization (Trillium Software, 2011). Balanced Scorecard There are four aspects to the balanced scorecard approach; the customer, financial, internal business approach and the learning and growth perspective (Shojalie, et al., 2012).The basis of the balanced scorecard method is that companies evaluate their objectives with respect to these four aspects (Khani & Ahmadi, 2012). The balanced scorecard method measures the effectiveness of the knowledge management method. It is a method of measuring the effectiveness of information collection, and using the knowledge for learning and growth. One might view the balanced scorecard method as the tool that shows the path from knowledge management to organizational learning. If the knowledge management methods and enablers align the results of the balanced scorecard method with firm strategy, then the performance of the organization improves (Liao, 2011). There are many instances where the British Airways have used the balanced scorecard method to align the results of knowledge management with the organization’s objectives. For instance, the move to Terminal 5 at London’s Heathrow airport followed a balanced scorecard approach to baggage performance (Heinz & Pitfield 2011). BA collects baggage performance data using a tracking system, and the analysis of this data contributed to the move, which made Terminal 5 exclusively a BA terminal at Heathrow. The move to Terminal 5 improved the overall customer experience, increased the overall efficiency of transfers of both passengers and their baggage, and increased the marketing opportunities for the BA brand (Heinz & Pitfield 2011). The company strategy of improving customer experience and its desire to remain the best in the world align with the balanced scorecard approach to evaluating baggage performance. The position of the company at Heathrow is central to its overall performance. It has prime slots and access to the most popular routes in the world, from one of the busiest airports in the world (Mathoorah, 2015). Communities of Practice The term communities of practice are relatively recent (Wenger, 2012). It refers to a group formed by people engaged in common experience. It can either be in-house within the organization or externally between various organizations (Wahid & Mustamil, 2014). In the airline industry, various communities of practice exist, which facilitate the success of the member airlines. The perfect example, perhaps, is the one world alliance, which BA helped to set up. Recent controversy facing the One World Alliance revolves around Qatar Airways joining the group, on the backdrop of its poor record in employee treatment (QCAA, 2013). There has been uproar especially from the ITF that its joining the respected organization is a shame (ITF, 2013). This has pushed Qatar into a response and undoubtedly towards a change of tact in handling employees (Walker, 2015). While this might be a negative response, information from cases like this likely informs human resource management decisions among competitors like British Airways. Soft Systems Thinking The soft systems methodology came from the work of Peter Checkland at the Lancaster University in the sixties (AREOL, 2015). The systems thinking methodology has since then been modified and refined. It is ideal for the solving of complex organizational problems involving a wide range of participants.The soft systems methodology is central to the knowledge management and organizational learning processes that have happened at British Airways in the past few years. They used the seven steps in Soft Systems thinking when evaluating their information gathering and knowledge management protocol. The refinement of this process and the adoption of the Trillium software by British Airways has improved the quality and consistency of information gathered. The decisions and resulting change management through organizational learning strategies, therefore, have been better informed. Systems thinking as a concept have always been at the heart of all learning organizations (Caldwell, 2012). British Airways employed the soft systems thinking into its strategy to considerable success. Conclusion Business strategy and infrastructure capability are important for the success fo a business. However, knowledge management and the accompanying organizational learning must supplement them in order for the company to compete (Chang & Chuang 2011). There is a positive relationship between knowledge management and the superior performance of an organization (Andreeva & Kianto 2012). Various knowledge management resources, including intellectual and social capital, contribute to the success of an organization (Mills & Smith, 2011).Knowledge management transfers the timely, useful information to the right people. Organizations often gather information, but sometimes they do not know that within the information gathered are trends that might help improve its business direction and competitive advantage. In the information age, knowledge has become a valuable business resource. However, historically, many knowledge management programs have resulted in spectacular failure. Knowledge management and its effects are sometimes difficult to evaluate, especially considering they take long to manifest in terms of financial or monetary returns. Knowledge is intangible, and the resultant value creation is long term. This makes long-term performance measurement important for measuring the success factors of knowledge management and organizational learning (Heaidari, et al., 2011).Knowledge management requires a strong backing from the top levels of management(Yazdani, et al., 2011). The examples that top management sets in their policies legitimize knowledge management and emphasize its importance(Tan 2011). Several reasons affect the willingness of management to support knowledge management. These include a lack of time, organizational politics, a general lack of quick performance indicators and a lack of understanding of the potential. Poor selection of the middle managers involved in the Knowledge management process might also impact the procedure (Al-Hakim & Hassan 2011). Despite this, British Airways has recognized the need for a strong knowledge management policy, and over time has used its knowledge to influence its strategy over the years. 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