Organisational Structure and Knowledge Management

These are just rough notes of my lesson for today in Knowledge Management. We’ve had to cover intra-organisational KM for this session and these notes are my attempt to try and get the gist of it. Please note that I did not conduct a thorough research on the topics mentioned below and that I’m just writing down what I got directly from the session.

For the past 25~30 years academics and practitioners alike have tried to identify and differentiate between organisational structures that have come and gone as the years progressed. During the early part of this period, the general move was towards a universalistic theory that will identify the “one best way” to organise a business. Thus, structures such as the U-form (organised along functional lines) and M-form (divisional grouping) were documented. Other structures identified were horizontal grouping, geographical grouping, and matrix organisations. The efforts of the universalistic movement, however, were futile. Many found that there was no “one best way” to organise a business. This then led to the rise of contingency theory.

Contingency theory can probably be summarised by the phrase “it depends.” Basically, the theory states that the structure of an organisation depends on the external environment in which it operates, specifically the industry to which it belongs. Thus, an industry that is relatively new and still in flux would mean that a firm operating within it will have to structure itself internally in a way that allows agility. An example would be to form a team-based structure. Likewise, a fairly mature industry that is quite stable would mean that a firm operating within it will have to utilise a different structure such as the M- or U-form.

The problem with contingency theory, however, is that it only considers one factor (external environment) in deciding the structure of the organisation. In reality, however, the external environment is not the only factor that is considered. This led to a shift towards configuration theory. Configuration theory states that organisational structure has a complex relationship with other factors such as those identified by Stephen Chen:

  • The skills and knowledge of employees
  • The culture of the organisation
  • The routines within the organisation
  • Tangible assets

Likewise, the above listed factors are inter-dependent with one another developing into a network form. Thus, when contemplating about organisational structure, management needs to consider all the above factors. How management goes about analysing these factors in a systematic manner, however, is not yet very clear in my mind.

A paper by Thomas Davenport et al. titled “The Mysterious Art and Science of Knowledge-Worker Performance” does provide some insights. I’m not going to talk at length about their framework, but the gist of that paper is that different knowledge workers have different needs and that an attempt to understand the difference and to segment these knowledge workers accordingly are important steps to optimise knowledge worker performance within the whole organisation. They then offer a simplified two-dimensional framework that illustrates how an organisation might design itself to fit the knowledge workers’ requirements. It’s interesting how very similar this is to some of the principles of marketing which state that an organisation must segment its market and customise its offering appropriately for each segment if it wants to maximise its profits.

Follow ups

Stephen Chen’s response to my post:

From: Chen, Stephen
Sent: Wednesday, 2 May 2007 1:21 PM
Subject: RE: re session 2 of KM


Thanks for your question and link to your website. The website looks interesting. You seem to have grasped the main points from the lecture about contingency theory and configuration theory but something that I probably did make clear in the lecture was that a key argument of configuration theory is that certain configurations are better than others i.e. some things fit well together e.g. flat organizational structures with an informal culture and systems. Some articles that discuss configuration theory in more depth are:

Configurational Approaches to Organizational Analysis Alan D. Meyer, Anne S. Tsui, C. R. Hinings The Academy of Management Journal, Vol. 36, No. 6 (Dec., 1993), pp. 1175-1195

Organizational Configurations and Performance: A Meta-Analysis David J. Ketchen, Jr., James G. Combs, Craig J. Russell, Chris Shook, Michelle A. Dean, Janet Runge, Franz T. Lohrke, Stefanie E. Naumann, Dawn Ebe Haptonstahl, Robert Baker, Brenden A. Beckstein, Charles Handler, Heather Honig, Stephen Lamoureux The Academy of Management Journal, Vol. 40, No. 1 (Feb., 1997), pp. 223-240

I am not aware of anyone that has published anything on its application to KM although Nonaka seems to be talking about something along similar lines when he talks about the concept of ‘Ba’, creating a ‘space’ or favourable conditions for knowledge creation (see 1998 and 2000 papers which I will post on the course website).

A framework that tries to apply the ideas of configuration theory practically is probably the McKinsey 5-S framework, published in Peters and Waterman’s ‘Pursuit of Excellence’. Although they do not refer to configuration theory, I think it is implicit in the framework which assumes that the various elements of strategy, structure, systems, shared values and staff need to fit together to lead to superior performance.

I hope that helps.



1 Comment

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One response to “Organisational Structure and Knowledge Management

  1. In my previous work, because of 9/11, they suddenly took contingency planning more seriously. To the point that the CEO and COO weren’t allowed to travel in the same plane, to give an obscure example.

    On the ground level, the moment you got in to your section you were already making plans to train somebody to replace you or cover for you. It allowed for freer flow of information based from what I saw.

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