Essay Sample on Strategic System Thinking

In the contemporary world, there are numerous concepts such as knowledge, ambition, and emotions which have value. The most significant question associated with these concepts is whether they can be measured or not. Nonetheless, where they are not quantifiable, one is aspired to determine if they have value among other questionable factors such as determining whether they can be moved or stored. Therefore, all the answers to these questions and issues are linked to Gray et al. (2015) who contend that before measuring something it is vital as an initial phase to comprehend what is being measured. Therefore, there has been a lot of focus on the execution of performance measurement systems within different fields over the previous decades. Currently, various performance measurements systems, for instance, objectives setting, target, and performance indicators, have been utilized broadly by different organizations to inspire employees, focus attention, and track the progress of their staffs and business units. Performance measurement has considerably influenced the manner in which different people work and live hence significant data which generates sophisticated information which can, in turn, be used for monitoring and evaluating work procedures may be accessible in large quantities. Gray et al. (2015), states that "before we measure something we must ask whether we understand what it is we are trying to measure." Therefore, this paper aims at critically discussing this statement in relation to the efficient development of the strategic knowledge background of an organization while using themes such intellectual capital and social networks, communities of practice, the challenge of performance measurement, and knowledge management to provide its analysis.

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Performance management systems offer organization manager with essential devices to measure business undertakings across every sub-unit of the organization. Through the utilization of performance management metrics, supervisors can see how various business entities perform in synergy to generate the projected outcomes. Thus, having the capacity to picture interrelations existing across business or organization entities, supervisors can make an influential decision related to hiring and budgeting as well as streamlining a business procedure. Additionally, for managers to develop performance measurement procedures effectively, knowledge on features of needed performance improvement accomplishment is required. Thus, it necessitates that there is a need to a have a precise description of goals which directly facilitate in solving present performance challenges or affect organization's strategy. Also, critical factors associated with organizations goals should be specified. Ultimately, every critical success factor ought to have major performance indicators which measure how appropriate individuals, organizations, and business units among others are performing in comparison to their strategic aims and objectives. Thus, an effective designed of key performance indicators offer significant navigation tools which provide managers and organizations with comprehension of the present levels of performance.

Knowledge Management

A business can only forecast its strategic and future path by considering the influence of its knowledge assets concerning its development prospects. Thus, it is imperative for a firm to create a link between key business procedures and business performance that are a direct outcome of the present organizational knowledge (Dasgupta & Gupta, 2009, 203). Therefore, in relation to organizations, knowledge may be described as what population acknowledges achievements, mistakes, customer preferences, procedures, and practices. It can be stored, for instance, in databases as well as being learned via different platforms, for instance, sharing of skills or best competencies which are internal or external to an organization. Nonetheless, it is contended that competitive advantage can be acquired via knowledge base that already exists in an organization, but the company's capacity to effectively and optimally apply this knowledge determines its ability to formulate new concepts or ideas. Additionally, both external and internal learning environment aided by external actors of an organization determines the knowledge base of a company. Thus, it is acknowledged that externalities which result from the knowledge amassing are significant particularly to innovative activities.

The most commonly adopted strategies for knowledge management in organizations are personalization and codification. In personalization strategy, knowledge is a preserve of an individual developing it where it is primarily shared via direct individual-to-individual contacts. Conversely, codification approach denotes that knowledge is cautiously collected and stored in databases that are readily accessible and utilized by organization's members. Additionally, with knowledge management, supervisors and managers may easily gain access to new info and utilize customized procedures which ease forecasting the requirements of the future centered on the existing and previous information. The capacity to forecast the future needs encourages innovative proposals, alternative solutions, and manager's perspectives. Dasgupta and Gupta (2009, 203), states that effect of systems of knowledge management on the performance is linked mainly to the capacity of the organization to engage in innovation through improved processes, services, or products. Therefore, with the understanding of the concept of knowledge, it is essential to deliberate knowledge management and comprehends how it affects the performance and competitiveness of an organization.

Knowledge management is a primary function of a business concerned with the improvement of productivity of an organization with aims to foster competitiveness in the market (Dasgupta & Gupta, 2009, 204). Therefore, knowledge management facilitates organizations in identifying productivity sources. Geisler and Wickramasinghe (2015, 16), contend further that achieving a competitive edge not only necessitates the presence of tangible and visible assets but also on a broad level, the availability of intangible assets. Intangible assets aid businesses and company operate more productively which additionally enhances their competitiveness. Knowledge management aids organizations decrease expenses, increase their market share, identify new markets, fulfill customer wants, improve efficiency, and increase their profits. Knowledge management thus as a management procedure, gives businesses base for acquiring and generating knowledge. It is also a procedure for choosing, managing, utilizing, disseminating and transferring essential expertise or information within a company to aid in primary administrative activities such as strategic planning, learning, problem-solving, and decision making (Geisler & Wickramasinghe, 2015, 17). Logically, effective management necessitates a suitable combination of managerial, social, and organizational initiatives alongside the deployment of appropriate and up-to-date technology. Conversely, as different organizations struggle to adapt from persistent sophisticated economic conditions in the business environment, knowledge management in the current time has been broadly acknowledged as a management standard. Thus, different researchers have found knowledge management as influences intellectual assets aiming at increasing the performance of an organization. Additionally, as demonstrated in the majority of the advanced business activities, knowledge is often shared within the business unit to endorse the efficiency of the current business activities by eliminating redundant procedures.

Intellectual Capital and Social Networks

Knowledge as afore-mentioned is a novel propeller of growth in an organization while social networks is a significant element which connects different individuals, cultures, and process to attain the objectives of an organization. Thus, prosperous firms and business are dependent on knowledge and skills, persistent innovation, and reliant on new efficient technologies for its employers rather than depending on assets, for instance, machinery, equipment, or plants. Many scholars have acknowledged that intangible assets are mainly accountable for the creation of value in an organization while social networks are responsible for establishing relation inside and outside an organization. Therefore, the realization by organizations that intellectual capital and social networks are an integral part of their operations is essential in improving their supreme business performance in a competitive environment (Kamukama, Ahiauzu & Ntayi, 2011, 153). It is hence essential to comprehend intellectual capital concept as well as explore problems and reasons linked with intellectual assets or intangibles. This will add to the literature the association existing between intellectual capital and knowledge management.

The present dominance of modern technological business organizations has revealed that organizations are lacking virtually intangible assets entice stocks which are highly rated compared to historical global industries. Therefore, a significant amount of deliberations concentrated on the intangibles as well as their measurement has emerged with an effort to explain observed distinctions between what is known as market and book value for companies. It is furthermore vital to say that there are no challenges encountered while measuring intellectual assets (Ohlson, 2001, 108). The previous experiences, for instance, in the collapse of the United States companies reveal that factors related to contractions of the market have led to a reduction in the value of equity stock. Henceforth, it is significant that the primary driver used for reporting and measuring intangibles should be transparent since many investors in most cases are anxious about the likelihood of inflated earnings (Bucklew & Edvinsson, 1999, 4). This shifts the pressure to organizations to report the driver of their performance value such as non-financial drivers.

On the other hand, understanding the definition of an asset encompasses a crucial milestone to comprehend the notion of intellectual capital as well as the potential approaches to measuring it. However, the most critical fact about organizations is that they restrict a considerable number of in understanding what an intellectual asset constitutes (Kamukama, Ahiauzu & Ntayi, 2011, 153). While assessed from the view of previous literature, it is evident that there exists a broad range of descriptions on intellectual assets that one can echo upon to gain the best definition of an intellectual asset. For example, from a non-accounting perspective, intellectual capital can be described as the difference between the market price of an organization and the book worth of an enterprise's identified assets described as the goodwill (Ohlson, 2001, 108). In his description, goodwill is equated to intangible assets. Nevertheless, it is significant to recognize that the distinction between the book price of an entity and its market price as well as determining the constituents of the variance between them has not been described in the past. It is often stated that goodwill may be internally or externally produced in an organization (Bucklew & Edvinsson, 1999,5). Therefore, with regard to the generally recognized accounting principles in most nations, only the purchased or external goodwill may be stated, and its worth is amortized over its significant life. This proposition hence denotes that goodwill is an intellectual capital or intangible asset.