Knowledge Management for E-Business Performance: Advancing Information Strategy to “Internet Time”

Published in Information Strategy: The Executive's Journal, vol. 16(4), Summer 2000, pp. 5-16 by Yogesh Malhotra

Paradigm Shifts & New Business Models

Related to the strategic notion of knowledge and knowledge management, there are some fundamental shifts that may be characterized as ‘paradigm shifts’ characterizing the transformation from the old world of business to the new world of e-business. These transitions are labeled as ‘paradigm shifts’ as they represent changes of unprecedented proportions having implications for turning the ‘tried and tested’ management theories and assumptions on their head. These shifts are in terms of how managers think about business strategy, information technology, role of senior management, organizational knowledge processes, corporate assets and organizational design as depicted in Figure 6. As evident, these are interrelated issues, as each of these issues has implication for one or more of the other issues.

Paradigm Shift in Business Strategy

The new world of business imposes the need for variety and complexity of interpretations of information outputs generated by computer systems. Such variety is necessary for deciphering the multiple worldviews of the uncertain and unpredictable future. Instead of long-term prediction, the emphasis is on understanding the multiple future world-views by using techniques such as scenario planning. An example is the strategic planning process facilitated by Arie de Geus, the author of Living Company, while he was the strategy chief of the multinational Royal Dutch/Shell.

Within the proposed model of knowledge management, organizational planning activities are not eliminated. Instead of embodying a set of instructions for what should be done, such activities are used as ideological devices for building constituency and defining the limits of responsible opinion. In this view, the organization plans for its futures, but does not rely on its plans. This observation is more representative of several Internet-based startups that question their business logic everyday and often consider execution of paramount importance while competing in Internet time. Acute attention and response to market needs is a key determinant for most business organizations, however for Net enterprises such as Yahoo!, ivillage.com and etoys.com it had implications in terms of market leadership, stellar business performance and multi-billion dollar IPOs.

The implications of this paradigm shift are in terms of a faster cycle of knowledge-creation and its application, by enabling continuous and rapid detection and correction of any discrepancies between the ‘theory of business’ and the dynamically changing business environment. In this model, access to organizational information base, authority to take decisive action, and the requisite skills are embedded at the frontlines where real action takes place so that strategy is devised and implemented in real time.

Paradigm Shift in Organization Design

The information-processing model of knowledge management is constrained by its overemphasis on consistency that is often institutionalized in the form of 'best practices.'  The proposed model of knowledge management is expected to break this cycle of reinforcement of institutionalized knowledge. While the traditional business logic was based on a high level of structure and control, the dynamics of the new business environment demands a different model of organization design. Often characterized as ‘living on the edge of chaos’, this model is characterized relative lack of structure and lack of external controls as described by Kevin Kelly in Out of Control. This model assumes the existence of only a few rules, some specific information and a lot of freedom. Within the proposed model, the designers of organizational knowledge management systems can, at best, facilitate the organization's 'self-designing'. In this organization design, not only would the organization's members define problems for themselves and generate their own solutions, the members would also evaluate and revise their solution-generating processes.  By explicitly encouraging experimentation and rethinking of premises, it promotes reflection-in-action and creation of new knowledge.

It is being increasingly realized that differences in perspectives may have a very positive role in innovation that feeds new product and service definitions and business models. Characterized by some management thinkers as ‘creative abrasion’, this view encourages promotion of individual autonomy in experimentation and learning. Going beyond the NIH (‘not invented here’) and the ‘NIH yet I did it’ syndromes, it encourages questioning of all given assumptions, regardless of their legitimization, for their ongoing and continual reassessment. Instead of emphasizing 'best practices' archived in databases, this model encourages continuous pursuit of better practices that are aligned with dynamically changing business environment.

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