1.

Sometimes even the most successful companies need to go through organizational change in
order to continue their success. But it’s rarely an easy process and 70% of transformation
programs fail. There are many reasons why a company may decide to undergo major
organizational changes.
Companies fall prey to active inertia—responding to even the most disruptive market shifts by
accelerating activities that succeeded in the past. When the world changes, organizations trapped
in active inertia do more of the same. A little faster perhaps or tweaked at the margin, but
basically the same old same old. Managers often equate inertia with inaction, like the tendency
of a billiard ball at rest to remain immobile.But executives in failing companies unleash a flurry
of initiatives—indeed they typically work more frenetically than their counterparts at
competitors which adapt more effectively.Organizations trapped in active inertia resemble a car
with its back wheels stuck in a rut.Managers step on the gas. Rather than escape the rut, they
only dig themselves in deeper.
The failure of success
What locks firms in a rut?The surprising answer is the very commitments that that enabled a
firm’s initial success.
To win in the market, executives must make a set of commitments that together constitute the
organization’s success formula. A distinctive success formula focuses employees, confers
efficiency, attracts resources, and differentiates the company from rivals.
Frames Become Blinders
Strategic frames provide focus and fit new information into a broader pattern. By
continually focusing on the same aspects, frames can constrict managers’ peripheral
vision, blinding them to novel opportunities and threats. As their strategic frames grow
more rigid, managers often shoe-horn surprising information into existing frames or
ignore it altogether.
Consider NatWest Bank (National Westminster until 1995).At its foundation,
National Westminster’s executives committed to a clear set of strategic frames--retail
banking is stagnant and UK suffering irreversible decline.The bank diversified into the
US, Europe, Far East and Soviet Union and expanded into new financial services.When
the Big Bang deregulation heightened competition, rivals such as Lloyds TSB refocused
on their domestic retail business.NatWest, in contrast, responded by accelerating
geographic and product diversification. Critics blasted NatWest throughout the 1990s for
waiting too long to divest money-losing distractions until RBS acquired NatWest in
2000

Processes Lapse into Routine

Established processes confer efficiency and facilitate coordination across
functional and geographic units.Over time, these routines resist change. With repetition,
processes become second nature; people stop thinking of them as a means to an end, if
they think of them at all. When the environment shifts, managers’ commitments to
existing processes trigger an actively inert response.
Relationships Become Shackles
Managers commit to external relationships by investing in specialized facilities to
serve a key customer, for example, or writing long-term service contracts. These
relationships can make or break a company—think of Microsoft and Intel or Wal-Mart
and Procter & Gamble. Over time, however, established relationships can turn into
shackles that limit flexibility
Recall the Daewoo Group, which at its peak approached $20 billion in revenues
and employed two hundred thousand worldwide before falling into bankruptcy.Daewoo
owed much of its growth to cosy relationships with South Korea’s General Park, who
ruled the country with an iron fist for nearly two decades.Park supported Daewoo and
other favored conglomerates with financing and tariffs. In exchange, Daewoo invested in
industries targeted for expansion. When subsequent governments ended policies that
favored the conglomerates, Daewoo’s Chairman Kim tightened links with remaining
friendly Korean politicians, and forged bonds with politicians in emerging markets such
as Vietnam, the Sudan and Uzbekistan to replicate cozy relationships at home.
Values Ossify into Dogmas
Strong values can elicit fierce loyalty from employees, strengthen the bonds
between a company and its customers, attract like-minded partners, and hold together a
company’s far-flung operations. As companies mature, however, their values often harden into
outdated dogmas, that oppress rather than inspire.
Consider Laura Ashley who founded her company to defend traditional values
under siege from miniskirts.Frilly frocks embodying Laura Ashley’s commitment to
traditional values of modesty initially appealed to many women but lost their attraction as
more women entered the workforce.The company, however , continued to pursue the
outdated designs that embodied an ossified view of its core values.

Managers who understand why good companies go bad are better equipped to monitor
existing commitments and keep them supple as markets shift.

1.2
the detection and correction of error". Fiol and Lyles later define learning as "the process of
improving actions through better knowledge and understanding"
 An organization does not lose out on its learning abilities when members leave the organization.
Organizational learning contributes to organizational memory. Thus, learning systems not only
influence immediate members, but also future members, due to the accumulation of histories,
experiences, norms, and stories. Creating a learning organization is only half the solution to a
challenging problem
Equally important is the creation of an unlearning organization which essentially means that the
organization must forget some of its past. Thus, learning occurs amidst such conflicting factors 
THREE TYPES OF ORGANIZATIONAL LEARNING
Single-loop learning.
This occurs when errors are detected and corrected and firms continue with their present policies
and goals. According to Dodgson (1993), Single-loop learning can be equated to activities that
add to the knowledge-base or firm-specific competences or routines without altering the
fundamental nature of the organization's activities. Single-loop learning has also been referred to
as "Lower-Level Learning" by Fiol and Lyles (1985), "Adaptive Learning" or "Coping" by Senge
(1990), and "Non Strategic Learning" by Mason ('93).
Double-loop learning
This occurs when, in addition to detection and correction of errors, the organization questions
and modifies its existing norms, procedures, policies, and objectives. Double-loop learning
involves changing the organization's knowledge-base or firm-specific competences or routines
(Dodgson, 1993). Double-loop learning is also called "Higher-Level Learning" by Fiol and Lyles
(1985), "Generative Learning" or "Learning to Expand an Organization's Capabilities" by Senge
(1990), and "Strategic Learning" by Mason (1993). Strategic learning is defined as "the process
by which an organization makes sense of its environment in ways that broaden the range of
objectives it can pursue or the range of resources and actions available to it for processing these
objectives." (Mason, 1993:843)
Deutero-learning
This occurs when organizations learn how to carry out Single-loop learning and Double-loop
learning. The first two forms of learning will not occur if the organizations are not aware that
learning must occur. Being aware of ignorance motivates learning (Nevis et al., 1995). This
means identifying the learning orientations or styles, and the processes and structures
(facilitating factors) required to promote learning. Nevis et al., (1995) identify seven different
learning styles and ten different facilitating factors that influence learning. For example, one of
the facilitating factors is identifying the performance gap between targeted outcomes and actual
performance. This awareness makes the organization recognize that learning needs to occur, and
that the appropriate environment and processes need to be created. This also means recognizing
the fact that lengthy periods of positive feedback or good communication can block learning
(Argyris, 1994).
Double-loop learning and Deutero-learning are concerned with the why and how to change the
organization, while Single-loop learning is concerned with accepting change without questioning
underlying assumptions and core beliefs.
1.3
Changes should not happen in one go because it is easier to implement them in stages.Changes
should never cause security problems for the workers.Managers must consider the opinions of all
employees on whom the proposed change will have an effect.If managers portray leadership by
first adapting to the changes themselves, employees are less likely to resist.Sufficient prior
training of employees can help them accept changes with confidence. Microsoft has transformed
from a business model based primarily on selling products, licensees (IP), and devices to a
cloud-based platform-as-a-service business.
Amazon initiated “Amazon Web Services” (Cloud) to overcome the cost of infrastructure
required to conduct operations. AWS has turned into a surprisingly lucrative profit engine.
Amazon has also built an entire ecosystem of products and services enabled by its Prime
membership

3.1
In the literature, employee know-how and organizational culture are said to possess the
characteristics of strategic assets (Michalisin et al., 1997). Employee know-how is one
component of organizational knowledge and a crucial strategic resource (de Hoog and van der
Spek, 1997). If the process of knowledge management is a function of the organizational culture
and employees' collective knowledge, then it follows that organizational knowledge is almost
certainly a strategic asset. To be a strategic asset, the resource must possess four characteristics
It must be:
1. valuable;
2. rare;
3. inimitable; and
4. nonsubstitutable.
We argue that it is the collective and cumulative organizational knowledge embodied in wisdom
rather than the knowledge of mobile individuals that is a strategic asset. Organizational
knowledge meets the characteristics of a strategic asset in the following ways. It is
Inimitable:
each individual in the organization contributes knowledge based on personal interpretation of
information. Group interpretations and assimilation of knowledge are dependent on the synergy
of the total membership of the group. In addition, organizational knowledge is built on the
unique past history of the organization's own experiences and accumulated expertise. Therefore,
no two groups or organizations will think or function in identical ways.
Rare:
organizational knowledge is the sum of employee know-how, know-what, and know-why. Since
it is dependent on the knowledge and experiences of current and past employees, and is built on
specific organizational prior knowledge, it is rare.
Valuable:
new organizational knowledge results in improved products, processes, technologies, or services,
and enables organizations to remain competitive and viable. Being the first to acquire new
knowledge can help the organization attain a valuable strategic advantage.\
Nonsubstitutable:
the synergy of specific groups cannot be replicated. Thus the group represents distinctive
competence which is nonsubstitutable.
This conclusion then suggests that organizations that wish to remain competitive should develop
mechanisms for capturing relevant knowledge, and disseminating it accurately, consistently,
concisely and in a timely manner to all who need it.
3.2

If organizational knowledge is a strategic asset, then the method used to implement a knowledge
management system is critical. Wiig (1997) has identified five strategies that are used by
organizations to implement knowledge management systems
1) Some pursue knowledge as a business strategy, where the focus is on knowledge creation,
capture, organization, renewal, sharing, and use at each point of action.
2) Second is the focus on intellectual asset management such as patents, technologies,
structural knowledge assets, customer relations, operations, and management practices
3) A third method is to focus on a personal knowledge asset accountability strategy. Here,
each employee is responsible for his/her own knowledgerelated investments, renewal of
knowledge, and sharing of knowledge assets within the employee's area of accountability
4) A fourth strategy is the knowledge creation strategy, with a focus on organizational
learning, research and development, and employee motivation to innovate and learn
5) The fifth strategy is the knowledge transfer strategy.
6) The specific method selected by an organization differs based on the individual business
and its unique needs.
2.2
If organizational knowledge is a strategic asset, then the method used to implement a knowledge
management system is critical
traditional knowledge management systems focus on know-what and know-how, loyalty and
caring reflect the care-why, which is the essence of a successful knowledge management system.
Here’s how you and your leadership team can improve knowledge sharing and collaboration in
your company.
1. Create a Collaborative Workspace
2. Open Office Design
3. Supportive Company Culture
4. Offer Incentives for Innovation
5. Inspire Innovation by Building Trust
6. Provide Helpful, Accessible Resources
7. Offer Comprehensive Employee Training
8. Make Resources Readily Available
9. Utilize Communication Tools

Knowledge management should be directed at two goals:

1. effectively managing explicit knowledge in the form of know-what, know-how, and
know-why with easily accessible databases and systems; and
2. ensuring that a supportive culture will encourage and facilitate the sharing of tacit
knowledge

2.1
As a team leader, you have the opportunity to implement a game-changing knowledge sharing
strategy. It’s about sharing ideas, motivation, and creative potential.
Create a Collaborative Workspace
If your company has a physical office, then there is much you can do to encourage collaboration
in the workplace
Open Office Design
workspace design was one of the key determining factors for innovation in a company.
Innovative companies were five times more likely to have a design that prioritized both
individual and collaborative spaces.
Supportive Company Culture
Beyond having a physical space that supports collaboration, you want to create an environment
where employees feel respected. This means giving them ample opportunities to contribute ideas,
offer feedback, and even raise issues with existing company systems or policies.
Offer Incentives for Innovation
For many employees, work can quickly lead to a “clock in, clock out” mentality. With no
incentive to contribute ideas or solve problems, many employees will stick to only completing
their daily tasks.
 Inspire Innovation by Building Trust
Creating a climate of reciprocal trust.Offering incentives in the form of bonuses, commissions,
new projects or opportunities, leadership roles, and networking events.Encouraging a culture of
upward communication.Emphasizing speed over lengthy studies by large committees.Offering
candid communication and honest feedback.Inspiring through action
Offer Comprehensive Employee Training
In fact, studies show that companies see far greater success when their employees are adequately
prepared from the get-go
Provide Helpful, Accessible Resources
While many team leaders are inclined to take a “sink or swim” approach to employee training,
the statistics are definitely stacked against this approach
Utilize Communication Tools
In organizations both large and small, knowledge sharing and communication can be slow.When
you have a lot of information changing hands, it’s easy for important details to get missed in the
transfer process.With communication and knowledge transfer tools, you can cut communication
time in half, all while increasing collaboration.

2.3
The following process is offered as a guide for actions that should be considered when
implementing a knowledge management system:
1) Assess the organizational culture to ascertain the values, mind sets, behaviors, and
outputs.
2) Identify stakeholders. Determine who needs to know. When do they need it? How do they
get the knowledge they need now?
3) Determine what knowledge or types of knowledge are critical to the organization
4) Determine where the knowledge currently resides, i.e. databases, people, documents, and
external sources.
5) Determine how the knowledge is created. What processes are currently in place for
generating new knowledge?
6) ) Select a business area or process to initiate knowledge management. Keeping the
project small will help to keep it focused, and will enable management to better assess the
success/failure of the program

2.4
The technology is a tool to help us capture and organize what we know, and enable collaboration
among people who may not otherwise be able to discuss their ideas and problems. The type of
technology used will be determined by the types of knowledge captured, and will be specific to
the organization. If the goal is to capture tacit knowledge, the technology should be used to
provide a means of communication to encourage networking and discussion groups of people
with common interests or problems. Knowledge management systems are rooted in social
interactions supported and encouraged by the technology (Tuomi, 2000). A mechanism for
sharing information is the expert system. Expert systems are useful tools for disseminating
knowledge. However, they represent past knowledge