How Effective Decision Making Leads to Corporate Success

Today’s global economy demands excellence. As enterprises scramble to remain on top by being competitive, they also need to innovate faster than their competitors. One example is the globally competitive company called Jones Development and Engineering. Now, this 25-year old company operates much like its competitor, but its business practices set them apart from other companies. The company has provided superior customer value, innovated faster than its competitors, supported personal learning in the company, and fostered knowledge-focused mentality and culture.

Now, this particular example has shown us that operating in a global economy is very challenging. As technology developed, the work became more sophisticated and complex, and many knowledge-related, people-focused factors have influenced the trend of globalization. Therefore, work has now expanded to take advantage of new knowledge capabilities.

Enterprises must learn to manage knowledge-intensive work, which deals with the intellectual work done by high performing people. The intensity of work is actually a function of at least four factors:

• The degree of knowledge intensity is determined by the amount of knowledge needed to deliver competent work under normal
• The degree of knowledge intensity is influenced by the variety of challenges

that a person handles competently.

• Knowledge   intensity   increases   in   high-value   situations   where   the

consequences of errors are large.

• The degree of knowledge intensity is parallel to the swiftness of

In order to survive, enterprises must change their approaches to business practices in a globalized economy. However, there are six major challenges to doing this:

• Work is becoming more complex as a result of increased demands to create and deliver better, greater complexity of management and operating practices, and increase of knowledge-intensive
• The nature of business has changed and the competitive environment is more

demanding as a result of changes caused by pressures from globalization, better informed customers, and increased dependence on intellectual capital.

• New and complex management, operational, and technical approaches are

introduced. These are generation knowledge management, advanced information management and technology, and an explicit people-focused knowledge management.

• The changes in technology, business conditions, regulatory and legal

requirements, practices, and demands are faster than ever before.

• Workers are less satisfied with traditional employment situations, and now

demand greater involvement.

• The need for traditional training and education often exceed allotted

These challenges can be addressed by following four management initiatives. These are:

• The enterprise should provide a systematic and comprehensive knowledge management disseminated widely and guided by central

• Pursue integrative management practices on personal, departmental, and

business unit levels, with collaboration and understanding of common goals.

• Foster a widespread mentality that capitalizes on the company’s intellectual capital and assets, operational and strategic value of human capital,   and

information capital.

• Provide competitive products and establish people-focused management and organization of knowledge-related

These initiatives lead to enterprise effectiveness and at the same time require good intellectual capital (IC) assets that come in many forms. First, the enterprise IC assets, which are part of the intangible capital, make up the company’s market value. Second, personal IC assets, which include professional knowledge and understanding and work-related personal relationships, form the foundation of each individual’s expertise or their ability to perform and act. Finally, the structural IC assets, which includes how the company handles its stakeholders, determine the effectiveness of the behavior and performance of the company.

The Effective Enterprise

Enterprise performance is a result of individual actions, and an enterprise only becomes effective when it is able to reach its goals and satisfy its objectives. Its behavior and personal actions are therefore important in all knowledge work. In short, the innumerable actions of individual people lead to the micro action of different departments and business functions, and it will ultimately determine the consolidated enterprise behavior.

First, effective enterprises rely on extensive and profound knowledge. Proactive managers must emphasize that knowledge is the principal force behind an effective enterprise, and therefore, knowledge should be managed explicitly and systematically. There are certain situation-handling tasks and methods that people and organizations can utilize effectively to strengthen knowledge-related capabilities and to facilitate their use in the enterprise.

Second, good and successful performances focus on the enterprise’s ability to handle and overcome challenges and take advantage of opportunities. Behind this ability, the management has a strong intangible asset management mentality, a deep engagement and interest in work, broad and forward thinking and situation- handling, and a culture that focuses on its people.

Third, an enterprise must be considered from both external and internal perspectives. The external or outside perspective deals with marketplace effectiveness and external stakeholders. The internal or inside perspective deals with effectiveness within the enterprise itself. Both play an important role in determining enterprise effectiveness.

Fourth, individual actions and decisions should work together and support enterprise objectives to succeed. There are, however, some crucial aspects to this such as effectiveness of internal and external networking and issues of enterprise’s positive growth and renewal.

Fifth, remember that the effectiveness of technology depends on the people. It is the people’s personal knowledge, expertise, and motivation to work that influences the success of using technology in the enterprise operations. No matter how smart the systems get, its effective implementation will still depend on people.

In order to understand an effective enterprise better, here are the characteristics, factors, and behaviors that contribute to the enterprise’s success.

Characteristics:

• Develop a positive and nurturing philosophy, leadership, and
• Utilize resources
• Focus on innovation, quality, and
• Continuously motivate and engage with the people in the

Success Factors:

• The management philosophy and practice supports effective behavior of

people and operational units.

• Personal knowledge and structural IC assets must be created, renewed, and

exploited.

• Knowledge and other resources of the enterprise should be made available to

all employees.

• Employees must be energized and motivated to work for the good of the

enterprise.

• Employees should be given opportunities to contribute and use   their

capabilities.

• Employees must be provided a safe environment in which to do their

Effective Behaviors:

• Adopt an ethical, safe, and amicable behavior.
  • Use the best and most effective approaches to conduct
  • Maintain a consistent and durable
  • Enable employees to become engaged in their
  • Address stakeholder concerns to show support for them.
  • Deliver competitive value to

The People Machine

People make decisions and act using different kinds of mental functions. They basically receive information about a situation and then apply knowledge to reason about them from the perspective of a certain set of objectives. This practice or thinking may be useful in the beginning, but it eventually does not cover everything.

First, it is important to understand that people often prefer to think, make decisions, and act in ways that are natural and convenient for them. By understanding this, it is easy to identify how to support successful personal and enterprise behavior. And then identify counterproductive misconceptions and learn how these can be addressed. Dealing with this includes several major developments:

• People remember concepts and stories more often than facts, so businesses and educational institutions should focus on explaining the rational behind the actions.

• Majority of decisions made are based on previous experiences or a tacit

mental model to handle situations.

• People have different cognitive styles and “intelligences.”
• Stress impairs retrieval from long-term

• Example behaviors and role models do impact the communication between

leaders and subordinates. Subordinates need these in order to act out in the desired manner.

• Greater mental capacities are required to deliver complex
• Knowledge and information are fundamentally different in both nature and function.

Second, organizations must realize that associations and biases govern the people’s actions. Most people think that decision making in general result from applying logical and reasoning strategies. However, people actually make decisions based on previous emotional experiences or situations.

Third, knowledge should not be confused with information, for the purpose of knowledge is action while information is description. The two kinds of knowledge, which are actionable and passive knowledge, should be used to assess, decide, solve problems, plan, act, and monitor situations.

Fourth, mental models are the foundation of knowledge, whether it is personal or enterprise knowledge. These models are often used as reference models, because these encode situations that are from personal experiences, and that were learned from other sources. People and even enterprises use these mental models to anticipate events and deal with situations. Each has an evolution cycle that is used to structure activities and priorities.

The personal knowledge evolution cycle has five stages:

1. Tacit subliminal knowledge
2. Idealistic vision and paradigm knowledge
3. Systematic schema and reference methodology knowledge
4. Pragmatic decision-making and factual knowledge
5. Automatic routine working knowledge

The enterprise knowledge evolution cycle also has five stages:

1. Knowledge development through learning, innovation, creativity, and importation from
2. Knowledge is acquired for use and further
3. Knowledge is refined to make it available and
4. Knowledge is distributed and deployed to people, practices, technology, and
5. Knowledge is leveraged to become the basis for further learning and

innovation.

The Mental and Structural Models

People often imitate prior behaviors when it comes to making sense of situations, implementing decisions, and monitoring results. That is why organizations strive to provide stable and comprehensive operating environments by re-enacting past practices. This is how they instill organizational thinking and leadership culture and teach desired behaviors to all employees.

First, organizations use a mental model preview. The organization and the people inside it build and remember a large collection of behavior patterns based on experiences. Thus, they act alike by repeating behaviors that were successful and reinforced positively.

Second, many people often use a personal reference model. They want an example they can use to adapt their problem to and learn how to handle it. This model is found on several conceptual levels namely: governing principles model, general approach model, specific method model, and operational action model.

Remember that the most basic reference models are stories, because most people find it easier to remember. The stories also provide both a context and a framework to handle situations. These are important for the following reasons:

2. Stories simplify things because it is always hard to grasp the whole coherently.
3. Stories make for more effective
4. Stories are able to tackle new
5. Stories help us learn
6. Stories allow better mental

Third, enterprises use organizational reference models. These allow the enterprise to see the relationships and connections between stakeholders and operations. It is so effective that numerous enterprises automate their organizational reference models in computer-based performance support systems (PSS).

The Individual Situation-Handling

People know that to handle a situation, action is always required. The problem lies in determining actions that should be implemented to effectively handle situations and produce good results. This process people engage in when solving different types of problems is called situation-handling. This concept is very important as millions of people engage in it everyday. Now from a knowledge management perspective, understanding this is important to managing knowledge. In fact, there are four situation-handling tasks one can follow.

First is the sensemaking and situational awareness. In sensemaking, the purpose is to create an understanding of what a situation is all about. This is very important, because before a person tackles a certain task, he would need to identify the circumstances. Situational awareness is the functional proficiency that helps a person become aware and make sense of the situation.

Second is the decision-making, problem solving, and action space and innovation capability. In decision-making, the person has to identify and specify appropriate action-options to be implemented. Meanwhile, problem-solving is the process by which a person tries to find the desirable action-options to handle the situation. In addition, it is the action space that guides the person’s ability to make decisions, and it is the innovative capability that brings together the mental models and concepts that help a person tackle the situation.

Third is the implementation and execution capability. Now, implementation is often a major problem in enterprises. Expected results are not realized due to action-options not being implemented properly. However, the key to an excellent and successful implementation depends on good execution capability which is determined by a person’s general competence. It must include features to suppress bad decisions.

Finally, we have the monitoring and governance competence and perspectives. In monitoring, the situation-handling is overseen from start to finish. It provides guidance for interpretations, decisions, and actions, and delivers necessary adjustments. Also, it relies on regular feedback from the previous tasks. Meanwhile, governance competence and perspectives enhance the effectiveness of the monitoring task.

The Enterprise Situation-Handling

When individuals handle situations, it is to be expected that it will affect the enterprise’s behavior towards customers, products, costs, employees, and others. Thus, enterprise situation-handling is also anticipated.

Enterprise situation-handling has four tasks. First is the sensemaking and situational awareness. Sensemaking is perhaps the most important area within situation-handling and is often made difficult for several reasons. Equally important is situational awareness. This, to a large extent, is determined by the understanding and breath of knowledge in the enterprise.

Second, decision-making, problem-solving, action space, and innovation capability are also vital. In decision-making, the enterprise’s ability to survive and prosper is determined, because the decision-making capabilities fall within top management, operating divisions, departments, and even among individuals. As for enterprise problem-solving, this is performed by individuals and teams and is done using different approaches. Meanwhile, enterprise’s action spaces may be constrained by “group-think” and committee behaviors. As for innovation capability, this is determined by how better and faster the enterprise is able to innovate compared to its competitors.

Third, implementation and the execution capability of the enterprise should be considered. Implementation should be handled carefully, because problems with it may lead to the greatest difficulties of the enterprise. The solution is to involve everyone, not just the implementation team, in understanding the action-options to be implemented. Of course, the success of the implementation depends on the execution capabilities of an enterprise. Therefore, the enterprise should ensure the availability of necessary resources such as systems, financial resources, manpower, and more.

Fourth, metamonitoring and governance competence and perspectives is mandatory. Most enterprises today are fraught with dilemmas. This is why it is necessary to monitor the conflict situations to determine that these are handled well. Meanwhile, enterprise governance covers a much wider range from monitoring the ethical governance to monitoring treatment of its employees and the effectiveness of its internal operations.

The enterprise situation-handling model is important for several reasons. For one, it is applicable to most people-focused, organizational, and technology-based systems, and it simplifies all these to become a variant of regulatory feedback system. Another advantage is that the model depicts the process well and treats it from a particular perspective that leaves room for further interpretation. Finally, the model outlines a comprehensive structure of the process and provides a framework for analyzing and synthesizing personal and organizational action-oriented processes.

The New Generation Knowledge Management

Knowledge is the primary driver of enterprise performance. Hence, it must be managed by facilitating and strengthening knowledge-related processes, activities, and practices. Given this, it is clear that an effective knowledge management must be people-focused.

This is where the pursuit of new generation knowledge management (NGKM) comes in. Given that the primary interest in operating any enterprise it to make it perform well, there is a need to adopt a new kind of knowledge management that allows the enterprise to carry out knowledge-related processes, activities, and practices that will serve the enterprise well. The NGKM is more highly integrated with the enterprise’s philosophy, strategies, goals, systems, and practices. In order to understand it better, here are its characteristics:

• NGKM enables enterprises to pursue a broad and proactive business philosophy and management

• NGKM allows enterprises to exploit knowledge-focused business strategies

and practices.

• NGKM practitioners develop knowledge and intellectual capital stewardship

mentality.

• NGKM practices are systemic, self-sustaining, and self-renewing.

• NGKM practitioners adopt a systems perspective of enterprise     and

environment.

• NGKM allows for vigilant application of state-of-the-art KM practices and infrastructure

Five main perspectives:

• Societal and global perspectives focus on building knowledge-related

Strategic perspectives focus on creating and expanding relationships with

• • Tactical perspectives focus on exploiting knowledge processes. Operational perspectives focus on creating and fostering general KM practices.
• Knowledge implementation, manipulation, and application perspectives focus On manipulating and applying

Deliberate and Systematic Knowledge Management

• Foster knowledge-supportive
• Provide shared
• Focus the knowledge management practice to align with enterprise
• Practice accelerated

Six Success Factors:

• Management Philosophy and Practice
• Deliberate and Systematic Knowledge Management
• Knowledge and Resources
• Opportunities
• Permission
• Motivation

The Management Expectations

In today’s global business environment, people-focused knowledge   management

does support global excellence. Therefore, enterprises should expect several things when it implements the new generation knowledge management.

For one, the business environment is under pressure due to the increased requirements for better knowledge. Another is that effective knowledge behavior is vital, and thus, success relies on it. In addition, knowledge management promotes a number of further developments in the coming years. Also, the workplace will change both visible and less visible to the enterprise and its people. Furthermore, knowledge will be bought and sold as new approaches to trading knowledge are developed. Meanwhile, from a social perspective, there will be systematic and deliberate effects on the management of knowledge.

Now, modern enterprises should adopt integrating practices to ensure that internal operations are developed and conducted in harmony. The objective by which is to provide the capabilities and practices that enable the enterprise to effectively implement strategy and directions to achieve success. As for complex businesses, better practices are required because globalization has forced the need for greater enterprise effectiveness. Moreover, intellectual work has become more complex as enterprises prepare its people to build knowledge, make decisions, and implement actions.

Integrative management is not easily achieved for it requires practice in operations and management practices, incentives, and education with extensive communication. However, it is still important to pursue it because it provides the capability to run the enterprise in effective and viable ways. It also cannot flourish and provide value without general participation throughout the enterprise. In short, integrative management should be part of the general culture.

Knowledge Management Conclusion

Today’s business environment is changing, and enterprises have to discover new ways to survive and stay on top of the competition. The key to being a success in the global arena is to develop good knowledge management. After all, organizational performance is primarily a result of effective actions by knowledgeable people. In addition, enterprises must initiate business approaches that develop these kinds of people.

People act effectively and efficiently when they understand situations, and when they are treated right, productivity increases. Therefore, enterprises must also remember that employees look at their leaders as role models whose behavior must reflect the enterprise’s philosophies. Finally, the enterprise must hold everyone accountable for their actions collectively, as it results to the enterprise behavior as a whole.

As each business and enterprise is required to change and adapt to the needs of our times, it is important to remember that the best business approach is a people- focused knowledge management.