Learning and

Learning and knowledge knowledge

management in the intelligent management

organisation
131
George H. Stonehouse and Jonathan D. Pemberton
Newcastle Business School, University of Northumbria at Newcastle, UK

Keywords Learning, Knowledge workers, Core competences, Corporate culture

Abstract Core competences, emanating from an organisation and that provide distinctive
benefits to customers, are commonly viewed as the basis of competitive advantage. While these
exist in many forms, the role of individual and organisational knowledge is increasingly important
in the formation of knowledge-based core competences. This paper explores the ideas of knowledge
management, making reference to a number of sectors and companies, and specifically the airline
industry, arguing that the culture, structure and infrastructure of an organisation are integral
elements that facilitate and nurture learning. As a consequence, competences are built and
developed within the “intelligent” organisation, which in turn, contribute to its competitive success.

Introduction
Global commerce is today characterised by ever increasing competition, rapidly
shortening product life-cycles and advances in technologies, all co-existing in a
turbulent environment within which “hypercompetition” is now the norm
(Chakravarthy, 1997) and the rules of chaos and complexity theory apply
(Turner, 1996).
Creation and sustainability of competitive advantage has never been more of
a challenge. However, flexibility and adaptability, and the ability of both
individuals and organisations to learn from their experiences, are now integral
elements of a firm’s business strategy. Arguably, as the pace of change
accelerates, the survival and performance of an organisation is governed by the
speed at which these organisations learn to develop knowledge-based
competences that are both durable and adaptable. In other words, organisations
must become “intelligent”, continually learning more about the nature of, and
the relationship between, their internal and external environments.
Central to the intelligent organisation is the notion of knowledge. This takes
many forms balancing an understanding of internal activities and competences
of the organisation with an appreciation and awareness of the wider external
environment.
This paper argues that by learning about the learning process itself, and by
formalising the processes and structures of knowledge management,
organisations can shorten the time taken to learn and improve the quality and
quantity of knowledge available. On a practical level, the use of technology
generated information is now an essential vehicle for expanding and Participation & Empowerment: An
developing knowledge based decisions. Throughout the discussion, reference is International Journal, Vol. 7 No. 5,
1999, pp. 131-144. © MCB
made to the airline industry, a pioneer of technology developments, but one University Press, 1463-4449
PEIJ which continues to adapt to a highly competitive global environment by its
7,5 innovative use of information within a knowledge based culture.

What is knowledge?
Knowledge is a shared collection of principles, facts, skills, and rules. More
specifically, organisational knowledge aids decision-making, behaviour and
132 actions, and is primarily developed from the knowledge of individuals within
the organisation. Firms strive to generate superior knowledge that, if
appropriately managed, results in superior performance. Thus, knowledge is,
arguably, the single most important source of core competence (Prahalad and
Hamel, 1990).
Knowledge may be either explicit or implicit. The former is tangible, being
clearly stated and consisting of details which can be recorded and stored. Implicit
or tacit knowledge is often unstated, based on individual experience and therefore
difficult to record and store (Demarest, 1997). Invariably, both forms of knowledge
begin as individual knowledge but, to substantially improve performance, are
transformed into organisational knowledge, an often difficult feat in the case of
implicit knowledge. Thus, it is the role of knowledge management to ensure that
individual learning becomes organisational learning.
Organisational knowledge can take many forms. Sanchez and Heene discuss
know-how (practical knowledge), know-why (theoretical knowledge) and know-
what (strategic knowledge) (Sanchez and Heene, 1997), while Whitehill devises
a typology centred on encoded (know-what), habitual (know-how), scientific
(know-why) knowledge, among other things (Whitehill, 1997). Demarest also
refers to commercial knowledge, defining this as:
… an explicitly developed and managed network of imperatives, patterns, rules and scripts
embodied in some aspects of the firm, and distributed throughout the firm, that creates
market place performance (Demarest, 1997).
Sectoral differences aside, managers invariably need to utilise such knowledge
to improve organisational performance. Devising a meaningful, prescriptive
and all embracing taxonomy of knowledge is not possible, but organisational
knowledge revolving around customers, products, processes, technology,
competitors, legal and financial issues must clearly be based on understanding
and experience, and form the basis of core competences and value adding
activities. Furthermore, knowledge can be specific or generic to varying
degrees. Experience has shown that specific knowledge is the most likely
source of competitive advantage and the basis of core competence. For example,
in the automotive industry, Porsche’s specific knowledge of design and
engineering technology is at the heart of its core competence and has been an
enduring source of competitive advantage. Generic knowledge, on the other
hand, is necessary to the operation of any business, but is ultimately unlikely to
generate a superior performance.
Whether specific or generic, knowledge arises as a consequence of access to,
and availability of, information. However, the transformation of information
into knowledge requires a degree of reasoning and inference which Learning and
organisations need to address. Hopper discusses the need for organisations to knowledge
focus on leveraging knowledge from their information resources in the context management
of airline developed computer reservation systems and comments:
Astute managers will shift their attention from systems to information. Think of the new
challenge this way: in a competitive world where companies have access to the same data, who
will excel at turning data into information and analysing information quickly and 133
intelligently enough to generate superior knowledge (Hopper, 1990).
Yet, nearly a decade on, research conducted as part of a doctoral study at
Newcastle Business School suggests that American Airlines, and other
competing carriers, are still coming to terms with this very issue. Barber
reports that the balance has shifted from the advantage that technology had
originally given their founding airlines to the integration of information assets
into their organisational decision-making and knowledge building processes
(Barber, 1998). One industry practitioner is quoted as saying:
The ability for us to do a better job in the future depends upon how well we utilise information
and how well we train and mould this information into something that helps us to be more
competitive … (Barber, 1998).
Although such statements are sector specific, these challenges are universal –
organisations are striving to find workable ways of deriving knowledge from
their vast information resources.
Management expertise has a major role to play in the process. An
understanding of the nature of knowledge itself is imperative, allowing the
creation of an environment in which knowledge is both generated, stored, co-
ordinated and diffused, thereby resulting in a core competence influencing
competitive advantage. However, business success is dependent on an
organisational culture of shared knowledge (Hopper, 1990). Quinn reinforces
this emphasising that knowledge, when shared, is one of the few assets that
grows exponentially (Quinn, 1992). Thus, by sharing knowledge throughout the
organisation, its value adding properties increase disproportionately.
The challenge, therefore, revolves around developing organisational
knowledge by formalising the context, structures and procedures which
promote the building and sharing of knowledge.
The processes and issues of knowledge management discussed above, and
their inter-relationships, are represented in Figure 1. Organisational learning is
not linear, and this is reflected as a series of loops in the structure given
(Argyris, 1977; 1992).
An intelligent organisation must ultimately exist in an environment that
encourages and supports the development and management of knowledge. For
example, it is only by understanding competences, and their relationship to
customer needs, that firms can develop competitive advantage.
Furthermore, not only must an organisation learn about its internal and
external relationships, but such learning must take place quicker than
competitors in order to deliver sustainable competitive advantage. The issues of
PEIJ
Knowledge
7,5 •explicit
generation •implicit/tacit formalisation
group exposure storage

Organisation
134 •culture
Individual •structure Organisational
learning •infrastructure and learning
communications

diffusion generation
co-ordination Organisational
knowledge
Figure 1.
The intelligent
organisation: knowledge
management and
organisational learning Core
loops competence

organisational learning and knowledge management are central to this, and are
developed further in the ensuing sections.

Intelligence and organisational learning

The intelligent organisation is founded on intelligence and learning. Thus, an
intelligent organisation is one that learns and manages knowledge
“intelligently”. Intelligence is based on the collection of information, reasoning
and quickness of understanding. Broadly speaking, intelligence results in
competences that add value to a company’s products and services in the eye of
the consumer.
From an organisational perspective, intelligence depends upon an ability to
acquire information, manipulate, analyse and interpret it, which through
reasoning and learning, results in the generation of relevant and timely
knowledge. If utilised appropriately, such knowledge assists in building new
competences and leveraging existing ones, allowing an organisation to
consistently outperform its rivals. There is a growing research base supporting
this approach which, according to Grant:
… the knowledge-based view represents a confluence of a number of streams of research, the
most prominent being “resource-based theory” and “epistemology” (Grant, 1997).
Intelligence and knowledge are dynamic in nature and consequently, their
development depends on the ability to learn. Learning takes place on both an
individual basis and at an organisational level representing a continuing and
continuous process aimed at the acquisition of skills and knowledge. This Learning and
arises from experience, from activity, from study, from analysis and thought, knowledge
from experimentation, or from teaching or training. Jackson identifies two management
fundamental and conflicting theories of learning, the behaviourist or stimulus
response approach and the cognitive or information processing approach
(Jackson, 1993). While the behaviourist approach suggests that learning takes
place in response to changing stimuli in the competitive environment, the more 135
complex cognitive approach implies that there is a “thinking” element to the
learning process.
Learning is an active process and represents a conscious effort to develop.
Thus, it is possible to increase the rate at which learning takes place by actively
facilitating the gathering of information, as well as the learning process itself,
thereby allowing companies to capitalise on such intellectual leverage (Quinn,
1992). By definition, learning is a cognitive, intelligent and diligent process.
Argyris refers to the concept of “double loop learning”, a situation where
learning revolves around not only the immediate solution of a problem, but
develops principles that may inform and determine future behaviour (Argyris
and Schon, 1978; Argyris, 1992). In this context, “specific” learning may also
lead to a “generalised” learning where individual solutions are derived, but then
generalised to apply in other circumstances. Occasionally, such approaches may
result in pre-emptive action aimed at repeating success or preventing future
problems.
Alternatively, Senge identifies adaptive and generative learning, both
apparent in many leading organisations (Senge, 1992). The former centres on
evolutionary changes in response to developments in the business
environment and which are necessary for survival of an organisation.
Generative learning is, on the other hand, concerned about building new
competences, or identifying and creating opportunities based on leveraging
existing competences, to generate new business opportunities. The UK retailer
Marks & Spencer’s entry into financial services is an excellent example,
capitalising upon existing competences in retailing but generating new
competences, centring on learning about the nature of financial services,
initially through its store card operations.
Although learning is an integral element of knowledge acquisition, there are
occasions where knowledge must be discarded or “unlearned”. This is
particularly true, for example, when changing customer needs and attitudes, or
introduction of new technologies, arise. Generally, such knowledge is not
rejected but merely archived and superseded by new knowledge. However,
inaccurate or outdated knowledge should be discarded and not be allowed to
influence individual or organisational decision-making.

The learning process

Organisational learning can be divided into two distinct but related parts of the
learning loop: individual and organisational learning. Each is dependent on the
other and is linked by the organisational context. More importantly,
PEIJ organisations learn because individuals learn (Kamoche, 1997). However,
7,5 individual learning is dependent upon the organisational context in which it
takes place, with the latter accelerating or slowing the learning processes.
Learning takes place in a variety of environments, at different levels and
utilises many approaches. Hilgard and Bower argue that learning is most
effective when a cognitive approach is adopted (Hilgard and Bower, 1967). This
136 is appropriate where:
• learners see relationships between all the elements in a situation;
• learning must start from related elements and build into a more complex
whole;
• learning involves understanding rather than rote learning;
• learning tests assumptions;
• there are clear goals to learning so that the process is not erratic;
• both convergent and divergent thinking are encouraged so that both
inventive and correct answers are achieved.
More specifically, individual learning centres on inquisitiveness, problem
solving, risk taking, challenging existing behaviour and understanding. In this
way, existing knowledge is adapted and new knowledge generated. Kolb et al.
suggest that learning is based on concrete experiences, observation and
reflection, formation of concepts and generalisations, testing of concepts, all of
which shape future actions (Kolb et al., 1991). The individual learning process
is accelerated and enhanced by the sharing of information and knowledge,
accompanied by an openness that encourages questioning, debate and
discussion of existing practices. Such group exposure serves as a platform on
which to test individual ideas and beliefs prior to their transformation into
organisational knowledge. Thus, the organisation provides a cultural context,
structure and infrastructure that both fosters and stimulates the learning of
individuals and groups.
Organisational learning, like individual learning, is concerned with the
building and adaptation of knowledge, but with more formalised storage,
sharing, transfer and co-ordination of its knowledge base through its
knowledge management systems. Thus, while knowledge management relates
to learning and the creation of knowledge, the management of existing stocks
of knowledge forms an integral part of the process.

Building the intelligent organisation

An intelligent organisation seeks to manage its knowledge base effectively and
efficiently, in the same way that it strives to control its human, financial and
other resources. Central to this, as discussed previously, is the organisational
context in which such activities take place. Creating a beneficial organisational
context demands that the organisation learns about its business but equally,
that it learns about the learning process too.
 Improvement and enhancement of its culture, structure and infrastructure Learning and
provide a conducive environment in which to develop individual and knowledge
organisational learning processes. management
Creating a learning culture
Organisational culture consists of the values, attitudes and beliefs that steer the
actions and behaviour of the individuals making up the organisation. To 137
facilitate learning, the organisation’s culture must nurture a climate within
which learning and knowledge are highly valued, motivating individuals to
constantly question existing practice, thereby advancing and enhancing the
competences of the organisation. Equally, the empowerment of individuals is
crucial in order to encourage experimentation with new approaches to business
and the development of knowledge skills.
Leadership is an important element of devising and maintaining a learning
culture, with leaders being “designers, teachers and stewards” (Senge, 1992).
Encouraging the sharing of knowledge, both explicit and tacit knowledge, by
generalists and specialists and the creation of an atmosphere of trust in which
experimentation is the norm, fall within this remit. Expertise of less
experienced individuals is often acquired via the diffusion and absorption of
implicit knowledge emanating from specialists within an organisation.
Thus, creating a learning culture involves:
• attaching a high value to knowledge;
• encouraging questioning and experimentation through empowerment of
individuals;
• building trust to encourage sharing;
• experiential learning of tacit knowledge.
Despite the apparent implication that learning is essentially a function of
internal culture, it extends across organisational boundaries between
collaborating and co-operating organisations. In essence, inter-organisational
learning, and the sharing of knowledge and competences, becomes a reality,
with accelerated learning arising from synergies between the shared
competences and knowledge of linked organisations.
Nike is one example of an organisation that outsources its manufacturing
operation with Asian partners and, as a consequence, shares certain aspects of
its technical and confidential knowledge with them. However, other aspects of
Nike’s knowledge of marketing and distribution, for example, are not shared,
emphasising how control of knowledge is a vital element of its management.
The balance between sharing and confidentiality is clearly crucial to
maintaining and developing organisational competences and is generally
accepted practice within international business. However, the airline industry is
one sector that has been extremely selective in the sharing of knowledge. The
growth in air travel has resulted in a highly competitive environment, with
airlines displaying their schedules on various global distribution systems
PEIJ (GDSs). However, these GDSs are limited in number and generally owned by a
7,5 handful of founding airlines (Barber et al., 1993). Summary information
pertaining to an individual carrier’s business is generated by the GDSs, but the
GDS owning airlines have access to both their own and competitors’ patterns of
business (Pemberton et al., 1999; Barber, 1998). While information about a
carrier’s own business is communicated to that airline, its timing and format
138 greatly influences the ability of carriers to learn about their operational
business and hence develop a knowledge-based culture.

Structuring for learning and knowledge management

The development of a learning culture is, in part, dependent on the structure
and infrastructure of the organisation. However, the creation of an
organisational structure that promotes learning is both difficult and
demanding.
Knowledge acquisition relies on the interchange of ideas between specialists
and experts in the same field, implying that functional groupings be retained to
ensure that experts interact, exchange ideas and develop new specialist
knowledge. Equally, organisational knowledge should, by definition, be holistic,
thereby guaranteeing that specialist knowledge from one area is integrated
with that of another. The building of holistic organisational knowledge, and its
co-ordination and diffusion, are assisted by cross-functional interaction. A
dilemma surfaces here, therefore, centring on how to build an organisational
structure that incorporates cross-functional and specialist groupings. No ideal
solution exists, but a matrix structure is one way of accommodating this, which
while blurring lines of responsibility assists the promotion of a holistic view of
knowledge. Alternatively cross-functional project teams or task groups can be
established within a more conventional organisation structure. In essence, this
is recognised by Hopper who discusses American Airlines approach to
knowledge management, centring on the structural and culture of organisation,
with the empowerment of individuals, at all levels, to participate in the
knowledge building process (Hopper, 1990). However, while specialist
departments continue to exist and are charged with the responsibility for the
generation of knowledge, changing internal structures and a culture of
integration now pervade the organisation (Pemberton et al., 1999).
Organisational hierarchy also poses a problem, the different levels making it
harder to create a learning culture that facilitates the building of knowledge, its
diffusion, co-ordination and control. Distortion of ideas and knowledge
commonly occur, the more levels through which they are transmitted. In
addition, hierarchy may hinder cross-functional and horizontal communication.
For these reasons, flatter organisational structures tend to better assist the co-
ordination and control of knowledge, and are more appropriate to effective
knowledge management.
Ultimately, network organisational structures are perhaps the most
appropriate for supporting a learning culture, having fewer hierarchical
features and existing in a variety of forms (Quinn, 1992). While there is no
single structure that uniquely supports learning, empowerment of the Learning and
individual together with flat network structures which foster cross-functional knowledge
communication and where functional barriers are low, appear to facilitate management
knowledge management more effectively. Network structures also permit
crossover of organisational boundaries and may often include collaborating
businesses. Such partnerships allow the sharing of organisational knowledge
and, at the same time, assist in building new knowledge. 139
Infrastructure and communications
Developments in technology, and particularly those in information and
communications technology (ICT), have played a vital role in providing the
infrastructure needed to support network structures and organisational
learning within and between collaborating companies. The media and channels
of communication that assist in the creation, storage, sharing and transfer of
knowledge are an integral part of building the intelligent organisation, but are
not the only resources required to create a learning context. Arguably, the
culture and structure of the organisation have the most significant bearing on
knowledge management, but ongoing technological developments have helped
make possible organisational configurations that were previously
inconceivable. Thus, the infrastructure of an organisation comprises the
systems and technology that underpin its knowledge management activities.
ICT has transformed the ability of both individuals and organisations to
augment their intelligence via accelerated learning. Personal computers coupled
with local and wide area networks have expanded the connectivity and
availability of computing power, which have acted as catalysts and increased
the potential for sharing knowledge between collaborating organisations.
Furthermore, intelligent databases not only store information, but assist in the
building and sharing of knowledge (Parsaye, 1989).
Artificial intelligence tools based around expert systems and neural networks
also contribute to the intelligent organisation. Although still developing, neural
networks feature computers that “learn” through experience, thereby mimicking
human learning. Continuing improvements in both hardware and software
suggest that the capacity for such learning will increase substantially, further
enhancing their role in the building and sharing of knowledge. Only those
businesses reacting to new technologies will be able to manage knowledge
effectively, resulting in more rapid learning and greater increases in intelligence,
permitting them to generate and sustain competitive advantage.
The storage and communication of knowledge is also central to the way in
which an organisation capitalises on its knowledge base. The media used for
storage and the means by which such knowledge is communicated may lead to
knowledge impurity. Making reference to the airline industry again, the sharing
of knowledge, as discussed in the previous section, is a case in point. The media
used in billing support by GDS vendors for participating airlines, as while as
the timing of dissemination, conspire to limit the receiving carrier’s ability to
utilise and develop its knowledge base (Pemberton et al., 1999; Barber, 1998).
PEIJ Distortion also results from the perception, interpretation, attitude and
7,5 motivation of the individual receiving knowledge. Thus, the nature of the
knowledge to be considered determines the media to be deployed. Table I gives
an indication of the various combinations that are currently utilised.
Explicit knowledge is comparatively easy to store and communicate, with
most media being effective. However, the abstract and intangible nature of
140 implicit knowledge makes this a far more difficult proposition. Nevertheless,
technological developments have created new possibilities, particularly through
multimedia and networking. Multimedia, for example, permits tacit knowledge
to be stored and communicated using interactive learning, while local and wide
area networks facilitate the effective sharing of knowledge.
Difficulties with knowledge storage and communication ensure that location
of the knowledge base is of critical importance, being particularly relevant in
relation to implicit or tacit knowledge (Grant, 1997). Such decisions should,
therefore, be decentralised to the individuals possessing implicit knowledge or,
alternatively, all decisions requiring such knowledge be referred to these
experts. Generally, explicit knowledge presents fewer problems, being stored
centrally and transmitted via information systems.
Systems and infrastructure go beyond the technology that supports them.
Training also plays an important part in the process of knowledge diffusion,
although conventional training tends to be based upon passive learning.
Learning must be an experiential and interactive process so that systems
employ techniques based on these principles. Organisational culture has an
important role to play in creating less formal systems for knowledge building
and transfer alongside more formal systems. In short, the harder and softer
aspects of the firm’s infrastructure must be supportive of developing
organisational intelligence.
Knowledge creation may also be hindered by a failure to actively seek
information, observe, conceptualise and adequately test concepts. In addition,
problems of storage and sharing can arise in relation implicit knowledge, the
latter tending to be largely individual and, consequently, difficult to translate
into a stored and sharable format. Technological and communication problems
can, on occasion, result in the loss of some knowledge in the process of transfer.

Knowledge type Associated storage media Associated media of communication

Implicit/explicit Human memory Voice/listening/body language/shared experience

Explicit Paper/print (book, file etc.) Reading
Explicit/implicit Disk (hard disk/diskette) Reading/viewing/listening/computer based
training
Explicit/implicit CD ROM/multimedia Reading/voice/viewing/listening/interactive
Table I. training/networking
Knowledge storage Explicit Audio cassette Tape player/listening
and communication Explicit/implicit Video cassette TV – viewing/listening
On a human level, individuals may resist sharing knowledge, its release seen as Learning and
a potential loss of personal or organisational power. knowledge
Finally, while the sharing of knowledge with collaborating businesses is an management
acknowledged feature of certain businesses, a degree of management control,
as discussed in the context of the airline industry, is often exercised to limit its
impact or prevent its transfer to competitors (Pemberton et al., 1999).
141
Knowledge and core competence
The 1990s have been characterised by the emergence of resource or
competence-based approaches to strategic management. Competitive
advantage, it is suggested, is based on firm specific core competences (Prahalad
and Hamel, 1990) or distinctive capabilities (Kay, 1993). Core competences or
distinctive capabilities are combinations of resources and capabilities unique to
a specific organisation and generating competitive advantage by creating
unique customer value. Knowledge is inextricably linked to core competence.
A core competence must be distinctive, complex, difficult to imitate, durable
and adaptable to ensure it is a source of sustained superior performance. By its
very nature, knowledge, specifically tacit or implicit knowledge, is complex and
difficult to imitate. Equally, the type of organisational learning apparent in an
intelligent organisation results in knowledge based competences that are both
adaptable and durable.
Knowledge plays a unique role in building and conserving core competences.
For example, core competences may be based upon knowledge of customers
and their needs, knowledge of technology and its innovative and distinctive
uses, knowledge of products and processes etc. Furthermore, knowledge of the
business environment, of competitors and their behaviour, of countries and
their cultures, may also assist in building competences that are both distinctive
and superior to those of competitors.
There are numerous examples of the ways in which knowledge acts as the
foundation for competence development and leveraging. Microsoft’s core
competences are based on their knowledge of building and marketing operating
systems and software. In turn, competitive advantage arises as a consequence
of their knowledge of computer hardware and networking, and in-depth
knowledge of the organisations producing such products. Thus, Microsoft has
leveraged its competences in personal computer operating systems and
software and, in the process, developed new associated competences revolving
around the acquisition of competitive advantage in computer networking and
Internet software. Such competence building and leveraging is essentially
knowledge based. In the airline industry, the early development of computer
reservation systems (CRSs) (now referred to as GDSs) provided American
Airlines with a core competence, not initially possessed by others. However, the
development of these systems into subscriber products, allowed owning airlines
such as AA to develop new core competences, greatly expanding their business
and increasing revenues (Barber, 1998; Pemberton et al., 1999; Stonehouse et al.,
1999).
PEIJ The competence-based approach also emphasises the potential of
7,5 collaboration in generating competitive advantage. A network of collaborating
organisations allows each network member to concentrate on building highly
specialised knowledge and competences that can be shared on a restricted basis
within the network, and results in synergies between the various knowledge
bases of the collaborating firms. Each network member retains responsibility
142 for, and control of, its own knowledge base, but a pool of network knowledge is
created which is greater than the sum of knowledge of the individual
organisations in the network. The strength of such an arrangement ensures
that imitation by competitors is extremely difficult. By concentrating on
specific knowledge areas, the process of learning within the individual
organisations comprising the network can be greatly accelerated. Conversely,
organisations attempting to build broad-based knowledge may be at risk of
slowing the learning process.
Ultimately, an intelligent organisation gains sustainable competitive
advantage by accelerating learning to develop superior intelligence and
knowledge that when harnessed, produce unique and durable core
competences. Furthermore, networking of knowledge enhances flexibility and
responsiveness of the businesses. On occasion, new knowledge and
competences can be acquired by admitting new members with desirable
knowledge and competences to the collaborative network. Yet again, the airline
industry provides ample evidence of this. New partnerships and alliances
within the sector have been the norm for several years (Barber et al., 1993), but
developments such as the Internet have meant that additional parties have been
enlisted to develop new ways of conducting business using this medium
(Pemberton et al., 1999). For example, Microsoft’s Expedia has resulted from
partnerships with several airlines, while the UK’s Flightbookers has resulted
from partnerships with Germany’s TISS and AA’s Sabre GDS (Richer and
O’Neill-Dunne, 1998).

The intelligent organisation

Most of today’s successful businesses can be considered intelligent enterprises,
of which there are many (Quinn, 1992). Ghoshal and Butler cite the Kao
Corporation as an intelligent organisation, their core competence based upon an
integrated learning capability (Ghoshal and Butler, 1992). They identify the key
elements of Kao’s learning culture as centring on the principles of equality,
individual initiative and the rejection of authoritarianism, supported by a flat
organisational structure within which organisational boundaries and titles
have ceased to exist. Ghoshal and Butler regard the company’s ICT as an
integral part of the learning environment and a means of operating an open
access policy by making information and knowledge available to all employees.
The secrecy which pervades many large corporations is notably absent from
the Kao Corporation.
Intelligent organisations learn about learning. Put simply, they not only
endeavour to learn about their own business, but attempt to understand the
processes by which individual and organisational learning take place. In this Learning and
way, they can improve and accelerate the process of building and applying new knowledge
knowledge. Quinn cites the case Intel who were able to accelerate their learning management
curve by concentrating on key points in the learning process (Quinn, 1992).
Similarly, Grant reports that companies such as Dow Chemical, Anderson
Consulting, Polaroid and Skania have developed corporate wide systems to
track, access, exploit and create organisational knowledge (Grant, 1997). Within 143
such organisations, questioning and creativity are encouraged, as are trust,
teamwork and sharing. Furthermore, infrastructures have been created that
support learning, assist in the storage and controlled diffusion of knowledge,
and which co-ordinate its application in creating and supporting core
competences.
The intelligent organisation is evolutionary by nature. As individuals and
organisations share knowledge, it is questioned, modified, improved and
amplified to produce a new higher knowledge base for the next cycle of growth.
The development of knowledge-based core competences is a necessary feature
of the intelligent organisation. The resulting adaptability and increased
organisational responsiveness ensure that competitors find it difficult to
identify, understand and emulate such competences.
Converting knowledge into core competences and competitive advantage
essentially depends on sharing and co-ordinating knowledge within the
organisation and with collaborating businesses. Intelligent organisations,
because of their superior ability to learn and share, appear more able to
anticipate and even create new customer needs, thus generating new sources of
competitive advantage. This remains a challenge for all businesses, but
knowledge acquisition is an integral feature of the cultural and learning
environment that exists within the intelligent organisation, and one which looks
set to equip them for the demands of global business in the twenty-first century.

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(George H. Stonehouse is Principal Lecturer in the Division of Strategic Management, Newcastle
Business School, University of Northumbria at Newcastle, UK. E-mail: george.stonehouse@
unn.ac.uk Jonathan D. Pemberton is a Senior Lecturer in the Division of Business Modelling,
Newcastle Business School, University of Northumbria at Newcastle, UK. E-mail:
jon.pemberton@unn.ac.uk)