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Involving management consultants in business process innovation projects

5. Analysis

5.2 Involving management consultants in business process innovation projects

44 phases of a project. I will now explain more deeply how this process is structured by applying Nonaka & Takeuchi’s (1995) framework of organizational knowledge creation.

5.2 Involving management consultants in business process innovation

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and their educations and so on. But they need to speak a language that can be understood once they get out into the organization, and without being super technical, because otherwise once they get out there, people will sit there and ask themselves, what are they talking about? And what are we doing? (Dakota 1057-1063).

Texas (4624-4625) points out that in order for him to be able to share information, he needs to trust the management consultant and the trust, he explains, is generated from the interaction. Wyoming (2877-2879) describes that for the consultant to be able to gain insight and an understanding of the client organization, he must have a form of

“musicality”. Wyoming (ibid) describes this “musicality” characteristic as an ability to engage with a broad variety of aspects that account for more than numbers and which occurs at multiple levels. It is then about acknowledging different social contexts and the drivers and mechanisms that are constitutive at a certain point of time and level.

If I apply Dakota, Texas and Wyoming’s emphasis on the interaction to Nonaka & Takeuchi’s (1995) notion of socialization, it seems that what they are arguing is that sharing experiences is a complex process. Rather than simply transferring information from one context to another they point out that information often makes little sense if it is dislocated from its context. The importance of being able to communicate and read into the client organization and its context is emphasized because it constitutes the ability to create tacit knowledge.

If the consultant lacks this ability, the “musicality” characteristic (Wyoming 2909-2914), and is unable to read into social contexts of an organization, he might not only be unable to get the insight, but also trigger resistance within the organization.

Wyoming implies similar to Dakota (1051-1057) that the ability to interact with organizational members is essential because knowledge is gained from interactions.

Following this both Florida (3716-3717) and Montana (3357-3366) stress that interaction is important because data is gained from the interactions with client organizational members.

These arguments resonate and emphasize the importance of Nonaka &

Takeuchi’s (1995:62) view that the initial step of an organizational knowledge creative process involves socialization through the creation of tacit knowledge. It is implied by the informants that knowledge gained from the interactions is important because it is a fundament for the continuous process. This underlines Nonaka & Takeuchi’s (1995)

46 notion that the importance of tacit knowledge is related to the utilization of it, i.e. to converse it to an explicit state. While so, the informants express that tacit knowledge is not easily detached, mainly because it appears within a set of organizational boundaries.

This makes it hard to transform. These cases relate to socialization through verbal accounts of tacit knowledge, but tacit knowledge is also created through observation.

5.2.2 Going native

In the mid 1980’s Dakota hired Boston Consulting Group (BCG) to help him find out if his new organization had developed the best ways to serve their customers. In the start of this project he told the BCG team that in the initial part of the process they should act

“as flies on the walls” (Dakota 191). His intention was for them to initially observe, because he thought it to be necessary for the management consultants to know the organization and its activities first (Dakota 191-198). This relates directly with Nonaka

& Takeuchi’s (1995:62) concept of socialization, which builds on the idea that tacit knowledge creation is created as a consequence of the ability to relate to a specific context and thus also be able to share mental models. Enabling creation of tacit knowledge is so forth done through observation.

Oregon (6107-6126) describes that he had a feeling that his company did not deliver the quality of service that he wanted his company to do, but he lacked substantial data to verify his hunch. In order for him to confirm if his hunch was valid and to point out which processes to change he needed observations of the activities on the sales floor. Consequently, he hired Mantec to map out the precise activities of his sales personnel. The initial assignment for Mantec was therefore to observe actions. The observing activities included timing actions with a timekeeper (Oregon 6106-6107,6126), but also to use working schedules to track down and see if the schedule was performed as it set out to be (Oregon 6134-6136). The same pattern occurred when New Hampshire (6663-6669) hired management consultants to help him figure out how they could optimize their delivery processes. Here the initial task was to observe and trace the practices of the processes. These observations included measuring the size of merchandise and trucks, but also driving along with the trucks to time them.

These stories seem to overlap in the perceptions of what is seen to be the underlying assumption of what the management consultants should do and how they should do it. Nonaka & Takeuchi’s (1995:63) argument is that the process of knowledge

47 creation through socialization occurs through knowledge conversions. The knowledge conversions are in turn constituted in the client-consultant relationship through interactions and observations. Applying Nonaka & Takeuchi’s (1995) framework of socialization implies that the socialization knowledge conversion process is effective when it enables the formulation of shared mental models, which in turn enables the ability to explicate knowledge. This underlines the notion that knowledge is an observable entity that can be transferred and transformed, and which main purpose is to be explicated.

5.2.3 Exposing “hidden” information

The conversion from tacit to explicit knowledge follows an externalization process (Nonaka & Takeuchi 1995). Accordingly, once management consultants have created tacit knowledge they can create explicit knowledge. In business process innovation projects this normally refers to the analysis and problem-solving phases9. The importance of explicating knowledge gains support from the empirical data as Dakota (1782) and several of the informants describe how the strength of the consultant resides in their ability to make implicit information or know how explicit through different modes of presentation (Montana 3343-3349, Dakota 1548-1553, Florida 3710-3715, Oregon 6130). Texas (4831) describes that the consultant works “as a catalyzer of things that lie latent in the company”. The reason for why management consultants are able to explicate know-how and expose “hidden” information is according to my informants a consequence of an outside-in perspective. Members of the client organization are often constrained by their everyday practices and fail to gain an overview and link different practices. When management consultants perceive and observe an organization from an outside-in perspective it is easier to see the structures and patterns of how practices and value chains are related (Montana 3471, Florida 3879-3884). It is this perspective in combination with industry experience that enables management consultants to create an externalization process.

Seen in the light of Nonaka & Takeuchi’s (1995:66) framework, externalization “holds the key to knowledge creation, because it creates new, explicit concepts from tacit knowledge”. Following this argument the importance of

9 See figure 2.

48 management consultants has less to do with them being able to explicate things that lie latent in the organization and more to do with creating new forms of knowledge. The outside-in perspective of management consultants is in this conception similarly not fruitful in itself, but rather because it enables management consultants to create new concepts by combining different data. Nonaka & Takeuchi (ibid) draw upon the conception that the key for this process is the usage of metaphors. Metaphors stimulate the creation of new knowledge as the perception and intuition of the understanding of a metaphor makes the involved person imagining other things simultaneously, and thus creating new knowledge.

5.2.4 Making stories constructing solutions

To explain how the externalization process is practiced, Kentucky has provided a good example. Kentucky (5591-5611) used BCG to solve a problem where his company had different views on how to serve their customers, because the company had two quite different areas of business, which demanded different organizational processes. BCG’s assignment involved interviewing the 15 most relevant managers to gather their opinions on the matter and how they wanted to structure the organization. BCG then acted as a facilitator for a discussion in three different workshops, debating three different topics of the problem at hand. During these workshops BCG presented what they had found out from the interviews. Kentucky argues that they could have gathered data about their own perceptions themselves, but BCG’s contribution lied in how they related the knowledge gained from these interviews with stories of how other organizations had encountered and solved similar situations. By providing stories of unnamed organizations with historically similar problems, but in other industries, BCG was able to provide generic alternatives of how the different perspectives could be incorporated in one organizational structure.

This describes how tacit knowledge, created from the interviews was externalized in the workshops by the use of storytelling and how these knowledge conversions are interrelated. In Nonaka & Takeuchi’s (1995:67) perception BCG created explicit knowledge by constructing metaphors from tacit knowledge. Because a metaphor functions to unify two thoughts into one word or phrase, the strength and usefulness of metaphors reside in an enabling ability to relate concepts with each other

49 and thus create meaning. For Kentucky’s organization this was apparent as Kentucky (5591-5611) experienced that the approach, where the relation between their current situation and how other organizations had successfully solved similar situations, was a very fruitful way to solve their problems. Nonaka & Takeuchi (ibid) further argue that it is the imbalance and inconsistencies among the concepts and their associations that give metaphors their enabling ability because it stimulates the construction of new meaning.

The problem with Nonaka & Takeuchi’s (1995) framework is that it is unable to describe those cases where inconsistencies do not lead to the creation of new an explicit knowledge. I trace this to their conception that everything is expressible (ibid:66).

5.2.5 Unsuccessful constructions

Nonaka & Takeuchi (1995:67) emphasize that the driving forces of an externalization process are the discrepancies and inconsistencies between a given concept and its association with the problem at hand, because it enables the construction of new knowledge. At the same time is it important to highlight that discrepancies and inconsistencies do not in themselves enable the generation of new meanings and knowledge creation.

Both Montana (3570-3588) and Oregon (6183-6206) explain how they have experienced situations where management consultants’ efforts of articulating tacit knowledge into explicit concepts have been unsuccessful. Although the management consultants have been able to provide an outside-in perspective and construct models, metaphors and concepts of how the client organization should solve a given issue, in these cases it did not lead to new explicit knowledge.

Nonaka & Takeuchi (1995:67) argue that “metaphors create novel interpretations of experience by asking the listener to see one thing in terms of something else”. This notion should not be assumed to be a casual effect of developing a metaphor as a means of creating knowledge through externalization. Externalization is constituted in the ability to create tacit knowledge and does so forth also manifest the link between socialization and externalization. The indication of Nonaka & Takeuchi’s (1995) framework is that tacit knowledge and the meaning of tacit knowledge can always be understood and found. In my research I found that for an example New Hampshire points out that the meaning of tacit knowledge is ambiguous

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One of the spaces in which I think consultants many times are challenged is when they come from an outside-in perspective and engage with a mapping process. They become familiar with the formal organization, but the informal organization and the informal decision-making processes, those are much more difficult for them to spot (New Hampshire 7010-7014).

He explains more specifically that

While it might say on a piece of paper that x is manager in that division, then it might just be that it isn’t x that is the real decision maker in that division because their might be a really strong middle manager or there might be a specialist that is the actual manager of the everyday practices or whatever it might be. And this creates an obstacle for the consultant, because it can go two ways, either it takes them a really long time to get this knowledge or they might never get it (New Hampshire 7024-7032).

New Hampshire’s point is that to a certain extent and while some knowledge might be easy to trace, creating tacit knowledge, which in turn constitute the foundation for creating explicit knowledge, is problematic. This highlights the limitations of Nonaka &

Takeuchi’s (1995) framework.

5.2.3 Breaking down concepts and communicating them

In the following two sections I will demonstrate how I can apply the concepts combination and internalization from Nonaka & Takeuchi’s (1995) framework. Nonaka

& Takeuchi (1995:67) explain the process following externalization as a combination process. In the combination process of the organizational knowledge, creation is different forms of explicit knowledge reconfigured into new explicit knowledge forms.

This relates to the diffusion of concepts and knowledge. Nonaka & Takeuchi (1995:68) depict this process as a process of systematization of concepts and the operationalization of corporate visions.

Dakota (2460-2466) emphasizes that turning ideas into action is a difficult task because no matter how simple a task looks on paper, a number of complexities will always emerge as the project reaches the implementation phase. Because operationalization and execution are dependent on individual capacities, complexities often emerge as a consequence of resistance or an inability to understand the changes.

Following this Oregon (6401-6418) argues that central to operationalization of

51 corporate visions is an individual understanding on every level. This task can be difficult for the management consultants because compared to the executives of the client organization their familiarity with the practices and values are limited. In Oregon’s case this was relevant as his project involved a new disposition of salaries. In practice it meant that about a quarter of every manager’s salary was re-located from handling back-door assignments to front-desk assignments. Logically speaking this was inconsistent because it meant a decrease in salary to improve customer service. Given this inconsistency, it was vital to have individual conversations and to make sure that there was both a commitment and an understanding of what this meant in practice.

Nonaka & Takeuchi (1995:68) explain that knowledge conversions in the combination process are often a result of creating new concepts through networking codified information and knowledge. Operationalization of corporate visions does so forth involve the creation of new knowledge by conversing an explicit form of knowledge into another. Texas (4569-4600) exemplifies how changes in explicit knowledge forms relate to the execution of a corporate vision.

In Texas’ (4569-4600) case this occurred as his company was involved in a business process innovation project of changes into the working methods of how they served their customers. The current working method was based on a waterfall-based model, and the new model incorporated a more iterative model. While the management consultants had coined this process “agile” because it was a process that was meant to continuously and instantly serve the customer needs, Texas realized that such a theoretical concept would be met with resistance and apathy. Instead it was named

“model of customer excellence” without changing the content of the model. Texas’ point was that in order to facilitate the implementation they needed to construct concepts that would fit at an operational level.

Nonaka & Takeuchi (1995:67) depict the combination process as an unproblematic process wherein new concepts emerging from the externalization process are de-constructed and networked within the organization. Networking knowledge comprises more complicated dimensions, which include considerations of how the explicit knowledge is formulated and how knowledge is converted into actions.

Networking and diffusion of knowledge is therefore a critical practice that includes

52 creation of new knowledge because it needs to consider aspects such as how a concept is conceived at an operational level.

5.2.4 Learning and creating motivation

Texas (4569-4600) exemplifies how conversions of explicit forms of knowledge are vital for implementation. When a business process innovation project reaches its implementation phase10the concepts that are broken down should be turned into practice. Montana (3402-3410) emphasizes the importance of the implementation phase and the importance of learning. The concepts should be understood, learned and practiced because this is what creates values. Nonaka & Takeuchi (1995:69) argue that when explicit knowledge is conversed and embodied as tacit knowledge, an internalization process has followed. Nonaka & Takeuchi (ibid) depict this as a “learning by doing” process wherein shared mental models or technical know-how are created.

Both Wyoming (2575-2586) and Montana (3402-3410) accentuate that what drives this process is motivation, involvement and collaboration. Montana (ibid) argues that the key for the implementation phase is the ability to understand and that the client organizational members feel ownership towards the project. The driving force of the implementation and what facilitates a “learning by doing” process is involvement.

Wyoming (2575-2586) explains that the client organization and its members have to feel commitment for the proposed changes.

The notion of organizational collaboration and involvement seem to resonate Nonaka & Takeuchi’s (1995:69) argument that organizational knowledge creation is constituted in accumulated knowledge at an individual level and the diffusion of this knowledge at a collective level through a new process of socialization. According to Nonaka & Takeuchi (ibid) this illustrates how the organizational knowledge creation spiral develops through a process where knowledge is transformed from a tacit form through stages where the knowledge takes an explicit form and back to a tacit form again. The “learning by doing” process, where knowledge is internalized, does then illustrate how knowledge creation in its tacit form becomes a valuable asset at an organizational level. The implementation phase of the business process innovation project and the practices that it covers, does then become valuable because it involves,

10See figure 2.

53 on one side, knowledge of new practices, and because it enforces a new spiral of organizational knowledge creation, moving from socialization towards internalization.

5.2.5 Summary and discussion

So far I have utilized Nonaka & Takeuchi’s (1995) framework of organizational knowledge creation to explain how knowledge creation is manifested in the client-consultant relationship and how this process is structured. This sheds light upon the first step of my analytical approach.

I have been able to demonstrate how management consultants create knowledge through processes of socialization, externalization, combination and internalization in business process innovation projects. This has been useful because it uncovers the relation between different forms of knowledge and the processes through which they are created. I have also traced the link between knowledge creation and the process of involving management consultants in business process innovation projects.

These explanations point towards an understanding of knowledge creation as a valuable asset in itself and which can be easily transferred from one context to another. This implies that management consultants add value by processing and transferring knowledge. Such explanations seem to resonate the view of management consultants as carriers, facilitators and sources of knowledge (Den Hertog 2000). The first part of the analyses does also underline Hislop’s (2002) argument that the social relations of the client-consultant relationship are significant success factors of an innovation process.

In addition, I have illustrated limitations to the perception of how knowledge is created. Nonaka & Takeuchi (1995:66) build their framework on the notion that tacit knowledge is constitutive for the creation of explicit knowledge and explication of knowledge is constitutive for organizational knowledge creation. The

54 limitation of this argument is that it stands or falls upon the conception that tacit knowledge is expressible.

Then, given that knowledge creation leads to value creation when management consultants are engaged in clients’ innovation processes (Den Hertog 2000, Gallouj 2002, Muller & Zenker 2001 and Kuusisto & Meyer 2003), utilization of knowledge as seen in Nonaka & Takeuchi’s (1995) concepts combination and internalization could account for an explanation of how processes of knowledge creation leads to value creation. My informants’ description of knowledge creation in business process innovation projects indicates that it involves a large set of complexities which Nonaka & Takeuchi’s (1995) framework is unable to account for. I trace these inabilities to the conceptualization of knowledge as a fixed entity and consequently value creation as a passive notion.

The informants of this thesis clearly proclaim the importance of implementation by arguing that it is the most critical part of the business process innovation project and that it is the capability of enabling implementation that creates value (Florida 3751-3756, Oregon 6255-6259, Dakota 199-204, Texas 5232-5233, Wyoming 2580-2581). This enabling capability becomes necessary since my informants moreover declare that in most cases management consultants are not involved in the implementation phase (Kentucky 5967, Oregon 6430, Wyoming 2718-2721, Florida 3857-3861). While Nonaka & Takeuchi’s (1995) framework is fruitful to describe the structure of the project and how knowledge conversions are interrelated, it is unable to account for how the combination process for example is deconstructed and later internalized, i.e. how implementation is carried out, because it is built on a notion that knowledge is an entity that is easily transferable.

Thus, in order to explain how knowledge creation is turned into action, and consequently creates value, I need to utilize a conceptualization that considers knowledge creation as an active process. It is first hereafter that I can account for the complexities that are immanent in the implementation phase.