Imitability


If a firm is making profits from core competences, the question is, why can’t other firms imitate it and build similar competences. This takes us to one property of competences: imitability—the extent to which a competence can be duplicated by competitors.  A firm would rather have competences that are difficult to duplicate or substitute. The question is, how? If the knowledge that underpins the competences is tacit in that it is not coded but rather embedded in organizational routines and cumulatively learned over time, potential imitators have three problems. In the first place, it is difficult to know just what it is that one wants to imitate in the second place, even if a firm knew exactly what it is that it wants to imitate, the firm may not know how to go about it since competence is learned cumulatively over the years and embedded in individuals or routine of firms. In the third place, since competences take time to build, imitators may find them themselves always lagging as they spend time imitating while the original owners of the competences move on to higher levels of the competences to newer ones.

If a competitor cannot build competences, the next question is, why not buy them? One answer is that competences may not be tradable or easily moved from one firm to another. Two reasons have been advanced for why. First, because of the tacit nature of the underlying knowledge, it may be difficult to tell just what it is that one wants to trade and who has the property rights for what parts of the underlying knowledge. What is it that we will buy from Honda that allows us to build zippy engines for cars, motorcycles, lawnmovers, and marine vehicles? Who has the rights for what part of the technological knowledge that underlies this competence? Second, the underlying knowledge may be sticky in that it is too costly to transfer. Because of the tacit nature of the data, one may need to observe the seller over long periods in order to learn. This may be too complex and expensive.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

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Tacit Knowledge, Explicit Knowledge


One way to describe tacit knowledge is in terms of intuition. Tacit knowledge is personal, intuitive knowledge, whereas explicit knowledge is the kind of knowledge that can be learned from a book. There is a vast difference between book learning—explicit knowledge—and experience-based learning—tacit knowledge.

Intuition is defined in Webster’s New World Dictionary as “the immediate knowing of something without the conscious use of reasoning.” There are times when we know something to be true but we do not know why or how we arrived at the understanding. One form of intuition arises because we know something so well and so thoroughly that we do not have to reason things out again but we immediately know it. This is tacit knowledge, as opposed to explicit knowledge, which is “formal and systematic.” Tacit knowledge is “deeply rooted in an individual’s action and experience.” It is intuitive and subjective whereas explicit knowledge is scientific and objective.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Sources of Innovation


The environment constitutes a very important source of innovations. Since tacit technological and market knowledge is best transferred by personal interaction, local environments that are good sources of innovation can make it easier for local firms to recognize the potential of an innovation. Take the presence of related industries. Being close to the supplier or complementary innovators increase the chances of a firm’s being able to pick up useful ideas from them.

Being close to universities or other research institutions helps in two ways. First, these institutions train personnel that can go on to work for firms or found their own companies. The knowledge that they acquire gives them the absorptive capacity to be able to assimilate new ideas from competitors and related industries. Second, scientific publications from the basic research often act as catalyst for investment by firms in applied research.

Finally, governments play a critical role in the ability of firms to recognize the potential of innovations. Their role can be direct or indirect. The direct role may be in the sponsoring of research. The indirect role is in regulation and taxation: lower capital gains taxes or other regulations that allow firms to keep more of what they make can allow them to spend more on innovation.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Just about Culture


Culture is a) a pattern of basic assumptions, b) invented, discovered, or developed by a given group, c) as it learns to cope with its problems of external adaptation and internal integration, d) that has worked well enough to be considered valid and, therefore, e) is to be taught to new members as f) the correct way to perceive, think, and feel in relation to these problems.

As a concept borrowed by organizational theorists from anthropology, culture can also be viewed as shared meanings or understandings that are largely tacit and unique to group members. It draws attention to facets of organizational life previously unattended to, and through shared interpretations it focuses action.

Managers use culture in a variety of ways. It can, for example, set the stage for the implementation of an organization’s business strategy. Culture can also prescribe acceptable ways for managers to interact with external constituencies such as shareholders, the government, or customers. Staffing decisions and performance criteria can flow from the organization’s culture. It can also guide the nature of acceptable interpersonal relationships within the company and the selection of an appropriate management style. It also has significance for organizational effectiveness: The culture’s strength and consistency, emphasis on employee involvement in decision making, facilitation of corporate adaptability to organizational change, and clarity of mission are key predictors of organizational effectiveness. Currently managers in many companies view the organizational culture as supporting team-based efforts.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

Reengineering and Workers’ Decision-making


Companies that undertake reengineering not only compress processes horizontally by having case workers or case teams perform multiple, sequential tasks but vertically as well. Vertical compression means that at the points in a process where workers used to have to go up the managerial hierarchy for an answer, they now make their own decisions. Instead of separating decision-making from real work, decision-making becomes part of the work. Workers themselves now do that portion of a job that formerly managers performed.

 Under the mass-production paradigm, the tacit assumption is that the people, actually performing work, have neither the time nor the inclination to monitor and control it and that they lack the depth and breadth of knowledge required to make decisions about it. The industrial practice of building hierarchical management structures follows from this assumption. Accountants, auditors, and supervisors check, record, and monitor work. Managers supervise the worker bees and handle the exceptions. This assumption, and its consequences need to be discarded.

 The benefits of compressing work vertically as well as horizontally include fewer delays, lower overhead costs, better customer response, and greater empowerment for workers.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

 

 

 

Just about Technology Transfer


The type of technology transfer that takes place depends on which level of its value stock the firm is using to enter the new market. If the firm is exporting products as they are, then the knowledge that underpins these products is encoded in them. For example, If a German firm is exporting cars to China, knowledge of the car’s engines, transmission, electronic fuel injection, and cooling system, and the linkages between them, is already embedded in the car. So is knowledge of the manufacturing processes that were used to build the car. In either case, the technology transfer is said to be product embodies since the physical product itself is being transferred.

 

If a firm uses core products to enter the market, the results of the technology transfer are the same as those for exporting fully assembled products if all the firm does is sell the core components to the emerging economy. If it uses the core components to build products for the foreign market, the firm must also transfer the knowledge of how to link the components and manufacture the end product. In the automobile example, the German firm not only exports the drive trains for cars, it also transfers the manufacturing knowledge that is needed to produce the cars locally. The manufacturing knowledge is said to be process and people embodied. The process being transferred is in the form of equipment, flowcharts, blueprints, microcodes, software, routines, and the knowledge embedded in employees. It is more tacit than product-embodied knowledge. The transfer of such knowledge requires personal interaction between the transmitter and the receiver and relatively more absorptive and delivery capacities than the transfer of the more explicit product-embodies knowledge.

 

If the firm decides to transfer capabilities and the knowledge that underlines them, then the knowledge is a lot more people and process embodied than product embodies. It also has a much larger tacit component to it than the other forms of transfer. This suggests that most of the measures for improving the effectiveness of technology transfer apply. For example, prior to the transfer, employees of the receiver nation can be sent to the transmitter country to study at universities, or to work at research centers or related industries to better prepare for receiving the technology. Training sessions in which members from both nations explore their cultures can help diffuse some of the tensions that occur. The transfer can take the form of joint ventures or acquisitions. During the transfer, continued workshops in the challenges of cultural differences can help keep reducing the impedance mismatch between the two entities.

My Consultancy–Asif J. Mir – Management Consultant–transformserorganizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact Asif J. Mir