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Session 3642

Knowledge Management and Core Competencies: Process Improvement Potential?

Taggart Smith Purdue University

Introduction

In the 1970s, Michael Porter developed frameworks for business strategy called force analysis which helped managers to see external opportunities and competitive threats. Dubbed the “environmental school,” this strategy approach dominated management thinking at that time.1 A criticism of this ends—ways—means approach to strategic planning questioned whether deciding on a strategy before deciding on the means to implement that strategy was viable because it made managers develop plans and then seek capabilities, rather than building capabilities and developing plans for exploiting them. Hiroyuko Itami in Mobilizing Invisible Assets also stressed building on strengths or invisible assets which were potentially profitable properties of companies that do not show up on a balance sheet: customer loyalty, technical expertise, reputation, and brand name. 2 Successful strategy should start with finding ways to exploit these assets, the most enduring source of competitive advantage. This thinking gave rise to the “resource based school” during the 1980s.

The resource based believers argued that sustainable competitive advantage was based on specialized resources used to gain a privileged market position. An organization’s history and experiences, its strengths and capabilities, and its character and culture contributed to its strategy. Thus, resource based thinkers hold internal attributes and capabilities as a more stable anchor than the demands of a volatile marketplace. Managers, then, can appreciate competencies and exploit them. But do they? The traditional SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) has emphasized developing tools for analyzing environmental opportunities and threats much more than developing tools for analyzing internal strengths and weaknesses. Human resources include the experience, knowledge, judgment, and wisdom of people in an organization. Organizational resources include history, organizational culture, relationships and trust involved in work groups, plus the formal reporting structure, management control systems, and compensation policies. When a firm’s resources and capabilities are valuable and socially complex—things like reputation, friendship, teamwork, trust, culture— these resources provide sustained competitive advantage for firms wise enough to exploit them.

An important strategic emphasis of the 90s, then, is the importance of resources and competencies to success. A problem is that resources and competencies are hard to isolate, hard to measure, hard to manage. Most organizational competencies start with individuals, who have skills, knowledge, intuition and can develop expertise. When individuals talk with others in their communities of practice, collective competencies develop and procedural knowledge develops. A process is formed, and an organizational competence develops. Competencies, then, are integrated task performance routines that combine resources needed for competitive advantage.

Proceedings of the 2001 American Society for Engineering Education Annual Conference & Exposition Copyright © 2001, American Society for Engineering Education

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Smith, T. (2001, June), Knowledge Management And Core Competencies: Process Improvement Potential? Paper presented at 2001 Annual Conference, Albuquerque, New Mexico. 10.18260/1-2--9489