Four pillars are required to build a culture of innovation, according to Pasher and Ronen (2011), as we can see in the graphic below. Mostly, these pillars depend on executive management’s understanding the value that knowledge creation brings to the enterprise and on their willingness to demonstrate their commitment to this activity providing the proper environment, resources, and processes required to create, test, fail, succeed, implement, and keep doing this as a sustained practice in the company. It also depends on their ability to gain the trust and empower the creative capabilities of all members of the company to share their knowledge with the enterprise and to use all the new resources made available to the through the innovation and knowledge management (KM) systems.
These authors also state in their book The complete guide to knowledge management: A strategic plan to leverage your company’s intellectual capital (NJ: John Wiley), that innovation consists of three components: reuse of existing knowledge, invention of new knowledge, and exploitation of overall knowledge. Innovation is not limited to technology but can and should happen in all business activities, including business development, human resources, customer relations, marketing, and work processes.
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Knowledge management provides the most efective means to govern the innovation process. Wickramasinghe and von Lubitz (2007) define KM in their book Knowledge-Based Enterprise: Theories and Fundamentals (Hershey: Idea Group Publishing) as the continuous process of an organization to create pertinent information and pertinent knowledge to facilitate management activities. Furthermore, they state that KM allows for better informed decisions, prudent and solid, delivering better results for the organization. Ultimately, the authors state that KM will reduce informational asymmetry, communicating to management unknown information to coordinate all organizational systems towards a unified goal. This work leads to innovation and to the monetization of the competitive advantages that can be derived from it.
Bringing all of this theory home to the companies struggling to grow in a declining economy, the call we make coincides with the recommendation made by Wickramasinghe and von Lubitz (2007). If your company is to become a knowledge enterprise, you must:
- Strategy: Integrate knowledge in the business strategy
- Architecture: Interweave KM in the structure and culture of the organization
- Processes: Create, represent access and transfer knowledge
- Learning: Update individual and organizational knowledge through continuous learning
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