Strategic management accounting and finance Essay

Strategic management accounting and finance - Essay Example That information, in turn, can then become the knowledge that leads to wisdom. The idea is that information, knowledge, and wisdom are more than simply collections. Rather, the whole represents more than the sum of its parts and has a synergy of its own. In an organizational context, data represents facts or values of results, and relations between data and other relations have the capacity to represent information. Patterns of relations of data and information and other patterns have the capacity to represent knowledge. For the representation to be of any utility it must be understood, and when understood the representation is information or knowledge to the one that understands. The value of Knowledge Management relates directly to the effectiveness with which the managed knowledge enables the members of the organization to deal with today's situations and effectively envision and create their future. Without on-demand access to managed knowledge, every situation is addressed based on what the individual or group brings to the situation with them. With on-demand access to managed knowledge, every situation is addressed with the sum total of everything anyone in the organization has ever learned about a situation of a similar natur e. Today's business environment is characterized by continuous, often radical change. Such a volatile climate demands a new attitude and approach within organizations-actions must be anticipatory, adaptive, and based on a faster cycle of knowledge creation. Movement from a manufacture to a knowledge context Most of today's companies are built around organizational structures ranging from bureaucracy to adhocracy (Brezillon). According to Weber, Henderson, and Parsons, the attributes of a modern bureaucracy include impersonality and the implementation of a system of authority that is practically indestructible. Toffler sees it as a network of roles fulfilled by individuals. Bureaucratic organizations usually deal with routine operations. At the other end of the spectrum, an adhocracy represents any form of organization capturing opportunities, solving problems, and getting results. One crucial difference between both structures is the way information and knowledge flow inside the structure. In the bureaucracy, they flow bottom-up along a hierarchical path, before coming down again along a different hierarchy. In the adhocracy, hierarchical ties are relaxed and information and knowledge mostly flow through lateral relations (Brezillon). Some of the current challenges businesses face includes: - A growing emphasis on creating customer value and improving customer service; - An increasingly competitive marketplace with a rising rate of innovation; - Reduced cycle times and shortened product development times; - A need for organizational adaptation because of changing business rules and assumptions; - A requirement to operate with a shrinking number of assets (people, inventory, and facilities); - A reduction in the amount of time employees are given to acquire new knowledge; and - Changes in strategic directions and workforce mobility that lead to knowledge loss. All of these factors make knowledge management a necessity rather than a luxury. Organizations must have a clear handle on how knowledge is discovered, created, dispersed, and put to use. In some ways, knowledge managem