Linking Information Technology, Knowledge Management, and Strategic Experimentation

Linking Information Technology, Knowledge Management, and Strategic Experimentation

V. K. Narayanan (Drexel University, USA)
DOI: 10.4018/978-1-60566-026-4.ch387
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Abstract

Historically, the focus of IT infrastructure had been to capture the knowledge of experts in a centralized repository (Davenport & Prusak, 1998; Grover & Davenport, 2001; Nolan, 2001). The centralized databases contained knowledge that was explicit and historical (e.g., competitor pricing, market share), and the IT infrastructure served to facilitate functional decision making or to automate routine tasks (as in reengineering). The users of technology approached the repository to obtain data in a narrowly defined domain (Broadbent, Weill, & St. Clair, 1999). Consequently, IT originally played a significant, yet ultimately limited role in the strategy creation process. Management information systems (MISs) arguably generated information that was less applicable to strategy creation, as noted in early writings on the linkage between MIS and strategic planning (e.g., Lientz & Chen, 1981; Shank, Boynton, & Zmud, 1985; Holmes, 1985). The active management of knowledge was similarly underdeveloped. Despite the fact that strategic decision makers had always emphasized the role of tacit knowledge, the actual importance of knowledge was not explicitly recognized. Formalized knowledge management (Davenport & Prusak, 1998; Dalkir, 2005), with its associated terminology and tools, is a recent development and as such did not inform the strategic planning process. However, the shifts that have taken place in IT infrastructures over the last decade and the recent developments in knowledge management (KM) have brought them closer to the creators of strategy. Indeed, both IT and knowledge management are increasingly enablers in the contemporary strategic management practice: 1. IT infrastructure is transitioning in its focus from the functional work unit to a process orientation. Whereas computer systems were once the focal point, the new infrastructure is network centric, with an emphasis on business knowledge (Nolan, 2001). For example, traditional search engines utilized rule-based reasoning to identify elements matching specific search criteria; the “state-of-the-art” knowledge management systems employ case-based search techniques to identify all relevant knowledge components meeting the user’s request (Grover & Davenport, 2001). 2. IT now takes into account contexts that include crossfunctional experts, knowledgeable on a wide variety of potentially relevant issues. Additionally, there is greater emphasis on the integration of infrastructure with structure, culture (Gold, Malhotra, & Segars, 2001), and organizational roles (Awad & Ghaziri, 2004). In many ways, the newer IT infrastructures have enabled the garnering of explicit knowledge throughout the organization to speed up strategy creation. The objective of this article is to outline how the developments in IT and KM are facilitating the evolution of strategic management to strategic experimentation to create quantum improvements in strategy creation and unprecedented developmental opportunities for the field if IT.
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Introduction

Historically, the focus of IT infrastructure had been to capture the knowledge of experts in a centralized repository (Davenport & Prusak, 1998; Grover & Davenport, 2001; Nolan, 2001). The centralized databases contained knowledge that was explicit and historical (e.g., competitor pricing, market share), and the IT infrastructure served to facilitate functional decision making or to automate routine tasks (as in reengineering). The users of technology approached the repository to obtain data in a narrowly defined domain (Broadbent, Weill, & St. Clair, 1999). Consequently, IT originally played a significant, yet ultimately limited role in the strategy creation process. Management information systems (MISs) arguably generated information that was less applicable to strategy creation, as noted in early writings on the linkage between MIS and strategic planning (e.g., Lientz & Chen, 1981; Shank, Boynton, & Zmud, 1985; Holmes, 1985).

The active management of knowledge was similarly underdeveloped. Despite the fact that strategic decision makers had always emphasized the role of tacit knowledge, the actual importance of knowledge was not explicitly recognized. Formalized knowledge management (Davenport & Prusak, 1998; Dalkir, 2005), with its associated terminology and tools, is a recent development and as such did not inform the strategic planning process.

However, the shifts that have taken place in IT infrastructures over the last decade and the recent developments in knowledge management (KM) have brought them closer to the creators of strategy. Indeed, both IT and knowledge management are increasingly enablers in the contemporary strategic management practice:

  • 1.

    IT infrastructure is transitioning in its focus from the functional work unit to a process orientation. Whereas computer systems were once the focal point, the new infrastructure is network centric, with an emphasis on business knowledge (Nolan, 2001). For example, traditional search engines utilized rule-based reasoning to identify elements matching specific search criteria; the “state-of-the-art” knowledge management systems employ case-based search techniques to identify all relevant knowledge components meeting the user’s request (Grover & Davenport, 2001).

  • 2.

    IT now takes into account contexts that include cross-functional experts, knowledgeable on a wide variety of potentially relevant issues. Additionally, there is greater emphasis on the integration of infrastructure with structure, culture (Gold, Malhotra, & Segars, 2001), and organizational roles (Awad & Ghaziri, 2004). In many ways, the newer IT infrastructures have enabled the garnering of explicit knowledge throughout the organization to speed up strategy creation.

The objective of this article is to outline how the developments in IT and KM are facilitating the evolution of strategic management to strategic experimentation to create quantum improvements in strategy creation and unprecedented developmental opportunities for the field if IT.

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Background

For the purposes of this article, information technology (IT) is defined as the physical equipment (hardware), software, and telecommunications technology, including data, image, and voice networks, employed to support business processes (Whitten & Bentley, 1998). The overarching plan for IT deployment within an organization is called the IT architecture. Technology infrastructure refers to the architecture—including the physical facilities, the services, and the management—that support all computing resources in an organization (Turban, McLean, & Wetherbe, 1996).

Key Terms in this Chapter

Strategic Management: The process of strategy creation and implementation. The concept of “strategy” as used here is one of marketplace strategy, that is, winning in the marketplace against competitors, entrenched or incipient. Strategy creation involves both goal formulation—defined in terms of external stakeholders rather than operational milestones—and crafting of the strategic means by which to accomplish these goals. Implementation refers to the means of execution of the created strategy.

Technology Integration: Activities involved in combining technologies. It could be combining process technologies as in incorporating biological process in mechanical equipment. Alternately it could be in product development, for example the merging of personal computers and satellite communications.

Information technology (IT): The physical equipment (hardware), software, and telecommunications technology, including data, image, and voice networks, employed to support business processes.

Options: A financial option owes the holder the right but not the obligation to trade in securities at prices fixed earlier. Options in the sense used here confer a firm the rights and obligations to choose a strategic alternative.

Trial-and-Error Learning: A process of learning through experimentation. Here strategic initiatives judged to be failures are not merely weeded out, nor are successes simply alternatives to be financially backed. In contrast, failures become occasions for discovery of root causes; successes often generate potential best practices.

Exploration and Exploitation: Exploration refers to process of discovery of knowledge, whereas exploitation refers to utilizing the knowledge. Similar to basic and applied research.

Knowledge Management (KM): A set of business practices and technologies used to assist an organization in obtaining maximum advantage of its knowledge.

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