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A rule of thumb for purchasing manager is to acquire_18436

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A rule of thumb for purchasing manager is to acquire_18436

    Improving Customer Service Through Organizational Learning A Case Study

    *Jason C.H. Chen

    School of Business Administration

    Gonzaga University

    502 E. Boone, Spokane, WA 99258 (509) 323-3421; chen@jepson.gonzaga.edu

    P. Pete Chong

    Department of Finance, Accounting, and CIS

    College of Business

    University of Huston-Downtown One Main Street, Houston, TX 77002

    (713) 221-8920; chongp@uhd.edu

    Kip Gering

    Product Manager

    Itron Inc.

    Spokane, WA 99216

    Phone: (509)891-3637

    Email: kip.gering@itron.com

    Ta-Tao Chuang

    School of Business Administration

    Gonzaga University

    502 E. Boone, Spokane, WA 99258 (509) 323-3431; chuang@jepson.gonzaga.edu

    *corresponding author

    Submitted to International Journal of Innovation and Learning

     Improving Customer Service Through Organizational Learning A Case Study

    Abstract

    As a result of deregulation, utility companies are focusing more on products and services that increase their operational efficiency when providing energy and water to customers. Businesses have to go through constant innovation on management, and innovation principles must be acquired through constant learning. The proper management of knowledge can create an organizational learning environment that creates a competitive advantage for a business organization as it responds to today’s business demands in a much more dynamic environment. This paper focuses on knowledge management and examines how it can be used to foster “Organizational Learning” within Itron, Inc, a company that provides better products and quality services to utilities and thereby enhances its competitive advantage within the marketplace.

    Keywords: Itron, Knowledge Management, Organizational Learning, Innovation, Customer Service

    Improving Customer Service Through Organizational Learning A Case Study

INTRODUCTION

    In the past, corporate information systems focused on the inherent ability to create and manage information. Businesses implementing these information systems enjoyed a significant competitive advantage, specifically in the realm of customer relationship management. Information overload is a perennial problem for knowledge workers in the electronic age, and one that is unlikely to diminish (Martin and Metcalfe, 2001), therefore, information management is not a significant competitive advantage due to its evolution and the information technology that supports it. The competitive advantage is created more by the ability to use information to create knowledge. Knowledge and its successful management can create a significant advantage over the competition and create a product (or service) differentiator in the marketplace. Businesses have to go through constant innovation on management, and innovation principles must be acquired through constant learning (Hong and Kuo, 1999). Furthermore, the proper management of knowledge can create an organizational learning environment that creates a competitive advantage for a business organization as it responds to today’s business demands in a much more dynamic environment. Knowledge management can be viewed as the enabler while organizational learning sustains the corporate competitive advantage.

    This paper focuses on knowledge management and examines how it can be used to foster “Organizational Learning” within Itron, Inc, a company that provides products and quality services to utilities. Organizational learning would initially be targeted towards Itron’s customer service business system. This would allow Itron’s Client Services Group to create customer service standards that create a barrier to the competitions’ products and services within the

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    marketplace.

    WHAT IS KNOWLEDGE MANAGEMENT?

    To understand knowledge management, one must understand knowledge. Knowledge is defined by Webster’s Dictionary as the “act or state of knowing; clear perception of fact, truth, or duty; certain apprehension; familiar cognizance; cognition.” Management is defined as “the manner of treating, directing, carrying on, or using, for a purpose; conduct; administration; guidance; control” (Webster, 1916). Despite very discrete definitions of knowledge and management, there are many different definitions and views of knowledge management (knowinc.com, 2002).

    “People do not manage knowledge; knowledge manages people.” - Alvin Toffler

    “It is the art of creating value by leveraging the intangible assets. To be able to do that,

    you have to be able to visualize your organization as consisting of nothing but knowledge

    and knowledge flows.- Karl Erik Sveiby

    “Knowledge is information that changes something or somebody – either by becoming

    grounds for actions, or by making an individual (or an institution) capable of different or

    more effective action.” – Pete Drucker

    At the most basic level knowledge management is processing data, creating information (who, what, when), and ultimately providing understanding (why) within an organization. Malhotra (2000) defines knowledge management as the “embodiment of organizational processes

    that seek synergistic combination of data and information-processing capacity of information technologies, and the creative and innovative capacity of human beings.” These work in concert to streamline and enhance the capture and flow of an organization's data, information, and knowledge and to deliver it to individuals and groups engaged in accomplishing specific tasks.

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    Knowledge Management in Business Environments

    Knowledge management is first and foremost a management discipline that treats intellectual capital as a managed asset. The primary goal of knowledge management is to deliver the intellectual capacity of the firm to the knowledge workers who make the day-to-day decisions that in aggregate determine the success or failure of a business. Knowledge management is not about turning knowledge workers into interchangeable components by plugging them into some corporate knowledge base. It is about partnering technology with a corporate culture and business processes, and using it as the vehicle to manage and deliver the business information and the expertise of fellow workers to the most fundamental driver of business growth: the knowledge worker.

    The Business Environment

    The traditional business strategy was based on a very predictable business environment. As a result, companies could gain an advantage by using information systems and information technology to improve operationally efficiency. In the customer service arena, companies focused on eliminating bottlenecks within their internal business processes to improve response time to customer inquiries and problems.

    Knowledge management systems to support this predictable behavior were based on the notion of data providing information to improve these processes and create more operational efficiencies. The evolution of the information-processing paradigm over the last four decades to build intelligence (wisdom) and manage change in business functions has progressed over three phases (Malhotra, 2000).

    ? Automation: increased efficiency of operations

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    ? Rationalization of procedures: streamlining of procedures and eliminating obvious

    bottlenecks that are revealed by automation for enhanced efficiency

    ? Re-engineering: radical redesign of business processes that depends upon IT intensive

    radical redesign of workflows and processes

    Today’s business strategy is based on succeeding in a very dynamic business environment. Unfortunately, today’s businesses and the organizational systems that support them have not readily adapted to the new environment. For businesses to compete in the global competitive market and adapt to their environment, they must address the outside forces by constantly creating value throughout a firm’s value chain. By creating value, a corporation can address the

    five competitive (external) forces of Michael Porter “Competitive Forces” model as shown in Figure 1 (Porter, 1980) and five internal forces: customer focus; communication; core competencies; complexity; and quality (Reeside and Walker, 1999).

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    Insert Figure 1 Here

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Knowledge Management Considerations

    One fundamental misconception corporations have made over the past decade with respect to knowledge management is the observation that it is created and can be inherent in some combination of information technology. As Charles West Churchman, whose work is referred to by many other scholars researching information systems and their development, wrote back in the 1970s, "To conceive of knowledge as a collection of information seems to rob the concept of all of its life... Knowledge resides in the user and not in the collection. It is how the user reacts to a collection of information that matters" (Harris, 1999). As a result of this fundamental conception, three myths of knowledge management have developed (Malhotra, 2000).

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    Myth 1: Knowledge management technologies can deliver the right information to the

    right person at the right time.

    Myth 2: Knowledge management technologies can store human intelligence and

    experience.

    Myth 3: Knowledge management technologies can distribute human intelligence.

    It is important to remember these myths when evaluating organizational business processes, resources and information technology and their applicability to knowledge management within an organization. One avenue of knowledge management to explore is the role of organizational learning in the creation and manifestation of knowledge.

    ORGANIZATIONAL LEARNING

    Definition of Organizational Learning

    Argyris defines organizational learning as the process of “detection and correction of errors” (Malhotra, 1998). There are four constructs that are linked to organizational learning: knowledge acquisition, knowledge transfer, information interpretation, and organizational memory (Mystakidis, 1998). Organizational learning is hampered by today’s organizational structure and business processes, which is based on a predictable business environment and inputs. Weick states, “Perhaps organizations are not built to learn. Instead, they are patterns of means-

    ends relations deliberately designed to make the same routine response to different stimuli, a pattern which is antithetical to learning in the traditional sense.” As a result, according to Weick, “organizational learning occurs when groups of people give the same response to different stimuli” (Mystakidis, 1998). In today’s industry, with demands created in a very dynamic environment, an organization’s goal would be to have their knowledge workers respond to different stimulus the same way, while still providing value added products or services to the customers.

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    Organizational Learning and Knowledge

    The success does not necessarily go to the firms that know the most, but to the firms that can make the best use of what they know and know what is strategically most important to the firm and to the society at large (Bierly et al. 2000). Therefore, firms should become “learning organizations” to maximize their knowledge base. There are some key relationships with knowledge one must understand when trying to create and foster organizational learning. As stated earlier, knowledge is more than data and information, but rather the embodiment of organizational processes that seek synergistic combination of data and information-processing capacity of information technologies, and the creative and innovative capacity of human beings (Malhotra, 2000). The creation of knowledge that embodies organizational learning can be expressed in the relationship between tacit knowledge and explicit knowledge. “Tacit knowledge

    is personal, context-specific, and therefore hard to formalize and communicate, while explicit knowledge is transmittable in formal, systematic language” (Nonaka, 1995).

    Nonaka’s assumptions about the creation of human knowledge are grounded in the

    relationship between tacit and explicit knowledge. The resulting conversion is a social process between individuals and not confined within an individual. Knowledge is created by human interaction when knowledge is transformed within a type or between types of knowledge. The process, as described by Nonaka and Takeuchi (1995), is a spiral through the four quadrants described in the Figure 2.

    By managing this spiral within an organization effectively with the appropriate systems in place, an organization can foster organizational learning through effective knowledge management.

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    Insert Figure 2 Here

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     For an organization to be successful in today’s rapidly changing environment, its capacity

    to learn must exceed the rate of change imposed on it. Hence, a learning process model is essential to facilitate continuous improvement and innovation in business processes. According to Buckler (1996), three ingredients are needed for this process to be effective: 1) focus to plot a

    course for the learning effort; 2) an environment which facilitates learning; and 3) techniques

    which enable learning to be efficient. Buckler also proposed a learning process model and he suggested that it should be developed as a tool for systematically applying the various concepts which have been outline to achieve improvement of business processes (Figure 3). Four major components are central to this model: 1) the learning support system that provides the environment in which learning will be facilitated, and its success will depend heavily on the quality of leadership provided by managers and team leaders; 2) the process by which the company develops, communicates, and implements the strategies and policies necessary to meet its business objectives; 3) learning needs diagnosis should be directly related to the company’s strategy via its policy deployment process; and 4) the most important feature of the model, the progress review process, however, it will only be truly effective in an environment where “challenge” and “criticism” are not perceived as “threat”, and where the views and considered opinions of everyone working in the business process are valued by managers at all levels (Buckler, 1996).

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    Insert Figure 3 Here

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    A BUSINESS EXAMPLE: Itron Inc.

    Background

    Itron Inc. is a global solutions provider for collecting, analyzing and applying electric, gas and water usage data. Itron’s customers are electric, gas, and water utilities. Itron solutions allow utilities to provide value added services and increase their operational efficiencies to better serve their industrial, commercial, and residential customers. Itron began in 1977. Their first systems consisted of handheld computers and software that were developed to replace the manual, paper-intensive process used by most utilities at that time to read meters. In the early 1990s, Itron offered solutions that collected usage information from meters using Automatic Meter Reading (AMR) technology. In 1996, Itron expanded further into advanced energy usage data collection and analysis with the acquisition of technologies for commercial and industrial customers.

    Vision

    Itron’s vision centers on the delivery of knowledge to their clients enabling them to meet their operational and strategic objectives in the new deregulated marketplace. That means transforming the data that Itron systems collect into valuable knowledge that will enable our clients to optimize energy and water delivery, increase operational efficiency, strengthen customer relationships, drive new business development, and increase shareholder value (Itron.com, 2002).

    Itron’s Client Services Group plays an important role in helping its clients achieve their vision. Client Services offer an array of services that provide value by reducing a client’s financial and operational risks, improving system performance and reliability and improving customer service. Because of the amount of customer interaction that occurs through service, much of Itron’s customer operational and product knowledge is created and fostered within Client

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