Strategic Management: Competitiveness and Globalisation 7th ASIA Pacific Edition by Dallas Hanson So

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Increasing knowledge intensity
It is becoming increasingly apparent that knowledge – information, intelligence and
expertise – is a critical organisational resource, and increasingly, a source of competitive
advantage. As a result:
• Many companies are working to convert the accumulated knowledge of
employees into a corporate asset.
• Shareholder value is increasingly influenced by the value of an organisation’s
intangible assets, such as knowledge.
Note: Intangible assets are discussed more fully in Chapter 3.
Teaching Note: To achieve competitive advantage in the information-intensive
competitive landscape, organisations must move beyond accessing information
to exploiting information by:
• Capturing intelligence.
• Transforming intelligence into usable knowledge.
• Embedding it as organisational learning.
• Diffusing it rapidly throughout the organisation.
This discussion implies that to achieve strategic competitiveness and earn above-
average returns, organisations must develop the ability to adapt rapidly to change or
achieve strategic flexibility.
Strategic flexibility represents the set of capabilities – in all areas of their operations
– that organisations use to respond to the various demands and opportunities that
are found in dynamic, uncertain environments. This implies that organisations must
develop certain capabilities, including the capacity to learn continuously, that will
provide the organisation with new skill sets. However, those working within
organisations to develop strategic flexibility should understand that the task is not an
easy one, largely because of inertia that may build up over time. An organisation’s
focus and past core competencies may actually slow change and strategic flexibility.
Teaching Note: Organisations must be capable of rapidly and broadly applying
what they learn to achieve strategic flexibility and develop capacity to change in
ways that will increase the probability of succeeding in uncertain,
hypercompetitive environments. Some organisations must change dramatically
to remain competitive or to return to competitiveness. How often are
organisations able to make this shift? Overall, does it take more effort to make
small, periodic changes, or to wait and make more dramatic changes when these
become necessary?
Two models describing key strategic inputs to an organisation’s strategic actions are
discussed next: the Industrial Organisation (or externally focused) model and the
Resource-Based (or internally focused) model.