p.259 The organisation that wants to build competitive advantages has to
create and leverage its capabilities.
p.259 Because knowledge is central to strategy formulation and implementation,
knowledge management has become a key strategic task facing managers for achieving success in today’s complex and dynamic
environments.
p.259 Creating and sustaining competitive advantage is the
core of strategic management (Barney, 1991; Prahalad and Hamel, 1994; Porter, 1985).
p.259 A 'learning organization' is an organization skilled at creating,
acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge (Senge, 1994).
p.259 strategy processes are central to seeking and securing competitive
advantage
p.260 We refer to knowledge engineering and management as the process of
managing the individual and social cognitive mechanisms through which an organization acquires knowledge [and] creates new
knowledge
p.260 The traditional view of strategic management is to match an
organisation's distinctive competencies with available opportunities and thereby gain competitive advantage. In other words,
strategy is the match that an organization makes between its internal resources and the opportunities and risks created
by its external environment.
p.260 The presumption of static causal connections by the traditional perspectives
is not only isolated from "emerging reality," but also implies naive approaches to strategic management practice (Bowman,
1990, 1995).
p.261 studying the cognitive heuristics of knowledge creation and problem
solving will present a realistic view of strategy process... a comprehensive knowledge engineering and management process
that facilitates creativity and innovation becomes the primary strategic management task.
p.262 The central emphasis of the knowledge-based approach to strategy
process is building a flexible and dynamic knowledge structure that provides a foundation for organisation-wide proactive
discovering process. So, it is important to understand the cognitive heuristics that offers the dynamism to knowledge
structure.
p.262 Modern psychologists argue that in situations that are
complicated or ill-defined, inductive learning is more effective than deductive learning (Schank and Abelson, 1977; Holland
et al., 1986). The extant research, although limited, supports the notion that inductive
heuristics are better than deductive methods for problem solving and decision making in uncertain environments. For
example, Brunswik (1956) suggested that the inductive mode involves the use of intersubstitutable probabilistic
cues and is therefore “uncertainty geared,” and this yields performance characterized by a preponderance
of “approximately” correct decisions/solutions, with relatively few decisions that are either precisely
correct or highly erroneous... McKenney and Keen (1974) explored different cognitive styles employed by managers in light
of the nature of problems they face. They reported that in situations where a lack of structure in the task and uncertainty
of environment defies analytical reasoning, the intuitive style can be highly effective. These findings suggest that in
situations such as strategic decision-making where small departures from precision are tolerable — but where extreme
errors lead to disaster — the intuitive approaches are most appropriate. Also, the presumption of objectivity
in deductive analysis often results in ‘dominant logic’, and thus leading to cognitive rigidity and misunderstanding
of the problem (Prahalad and Bettis, 1986). Excessive emphasis on calculative rationality and analytical reasoning
reduces the scope of strategic thinking and action. With lesser diversity and variety in managerial cognition, organisations
lose their creative capacity, idiosyncrasy, and uniqueness. Inductive logic represents a holistic thinking and explains how
new knowledge is created from related knowledge domains through intuition, metaphors, and analogies (Holland et al., 1986; Arthur, 1994). Induction is primarily a problem solving activity and it is directed by the goal of generating
mental models that approximate the ‘ideal’ rather than seeking an ideal representation (Holland et al., 1986).
p.264 In this model, knowledge engineering is referred to as the
use of specific cognitive heuristics through which knowledge is deduced and/or induced from the internal and external environments
for problem solving by organisational participants. Quintas et al. (1997) defined knowledge management as
"the process of continually managing knowledge of all kinds to meet existing and emerging needs, to identify and exploit existing
and acquired knowledge assets and to develop new opportunity."
p.265 From a cognitive perspective, organisations
are assumed to be open systems, which develop knowledge by accurately modeling the real world.
p.266 In a traditional strategic management process, the top
management serves as a pivotal point for concept, idea or strategy formation. The middle level and front-line employees and
managers merely execute the task routines to achieve the goals set by top management.
p.267 Knowledge usage is the effective link between knowledge generation
and competitive strategies... the development of proper knowledge usage roles in strategy formulation has a significant
influence on the implementation success.
p.267 knowledge management aims to create an environment under which competitive
advantage can be achieved.
p.269 Knowledge sharing leads... the organisation to quickly adapt itself
to emergent future. Through knowledge centered strategy process, the organisation becomes a learning organisation
and is constantly aware of the changing realities.
