B&Q Case Study

Executive Summary

In a modernized and globalized world, knowledge creation and synergization of knowledge in an organization is truly crucial.

As data and information are readily available, and information communication technology (ICT) has highly advanced, organizations such as B&Q need to understand how knowledge creation can assist to improve internal and external processes and also encourage innovation. In task one, the aim is to differentiate between possession of knowledge and practice of knowledge and examine which epistemology B&Q uses throughout their supply chain. B&Q uses possession knowledge whereby it provides all their vendors with a code of conduct guidelines which they need to follow through.

However, in the face of risk and uncertainty in an economic crisis, B&Q should adopt practice of knowledge and enabling people to do differently and better. In task two, the statement by Stoneman (2010) means that trust and power are the main factors that drive product, process and organizational innovation. For B&Q, due to their power as the distributor, they are able to develop and lay down the process and procedures that all their vendors need to adhere to. However, in an economic crisis, its regimental practice may ot work as uncertainty disrupts the flow of the procedures.

Introduction

The studies on knowledge and its characteristics have long been explored and discussed in the business and supply chain world. With the emergent of technology and innovation, the possession and practice of knowledge has become more essential in this “knowledge society” (Nonaka, 1994; Bell, 1973; Drucker, 1968; Toffler, 1990). But what is knowledge and how does an organization activate and generate knowledge?

Knowledge is defined as “awareness, consciousness, or familiarity gained by experience or learning” (knowledge, n. d) which are the ways people in a social situations would understand and make sense of where they are and what they are doing. When knowledge is conducted and embraced in an organization, it will result to a group of people who develop shared beliefs, behaviours and routines that shape organization capabilities. Experts such as Polanyi (1966), Nonaka (1994) and Cook and Brown (1999) divide knowledge into two categories called tacit knowledge and explicit knowledge.

Tacit knowledge is associated with the skills or know-how that people developed through their own experience in specific contexts. Whereas explicit knowledge is something that has been codified, written down or spelled out and is communicable across context.

Possession and Practice

From the word possession itself, one can understand that it is about the knowledge that people have in their mind (Cook and Brown, 1999). Blackler (1995), and Cook and Brown (1999) refer possesion of knowledge as “knowledge” and practice of knowledge as “knowing”.

Knowledge is a mental or cognitive capacity which is hierarchical in nature and comprises of data, information etc. moreover, possession of knowledge is a personal property where people render meaning from subjective experiences, perceptions and previous understanding. As human minds are individually unique, hence different people may perceive and intepret the same information or data differently. Meanwhile, practice of knowledge sees knowledge as something that it developed through social interaction such as project work, group assignment or group discussion.

When people practice knowledge, they convert tacit knowledge into explicit knowledge, thus transferring knowledge from one person to another. This is done through sharing stories, experiences or creating norms to a group of people hence enabling the experience of an individual to be related to a wider community.

B&Q Case

B&Q plc works with many vendors such as Kingfisher Asia (KAL) who supply products to B&Q. Hence to manage their vendors and ensure processes and procedures are followed, B&Q come up with code of conduct (B&Q Operational Standards for Supply Chains) for all their vendors.

The code of conduct is based on the international labour and envirnmental standards set by the International Labour Organisation (ILO) Conventions which factories and worksites of all vendors throughout the world need to comply to. In summary, vendors need to let B&Q have full visibility of the enitre supply chain and fulfill and obey the code of conduct criteria at all facilities. Any failure to meet the nine Critical Failure Points (CFPs) will result in B&Q not buying or purchasing their products.

Through this code of conduct, we can deduce that B&Q adopts a possession of knowledge rather than practice of knowledge. B&Q receives knowledge about labour and environmental guidelines from ILO conventions and uses the basic context to write down or capture in an information technology (IT) system which is then made available as an organizational resource – B&Q Operational Standards for Supply Chains. This is in contrast of having a group discussion with the vendors and seeking their opinions and views on how to create a better working environment for the workers (practice of knowledge).

For example, Baer (1987) and Abbott (1988) explained that in order to defend their position, occupational groups such as doctors would write down or ‘black box’ their skills and knowledge which is then used by others as guidelines or instructions to follow. B&Q is following the same concept as they wish to guard their position as a responsible organization or employer where the rights of all workers throughout the world are respected and protected. Thus, this results to an encoded knowledge (Blackler, 1995) for the vendors as information is transmited through the code of conduct.

Unlike an individual or specialist ‘black box’, the construction of the code of conduct requires the involvement of a group of people. This method of knowledge creation follows Nonaka’s SECI framework where it is a spiralling process of interaction between tacit and explicit knowledge (Nonaka,1994; Nonaka & Toyama, 2003). The SECI framework consists of four knowledge conversion processes; Socialization, Externalization, Combination and Internalization; which can be seen in Figure 1. The breakdown for B&Q case is as follow:

1. Socialization – The ILO standards which was made known to the B&Q management assist them to create their own knowledge or set of standards which vendors are to adhere.
2. Externalization – B&Q management then decides to have their on set of guidelines in accordance to ILO standards and form a group to write down the code of conduct.
3. Combination – We believed that during the process of writing down the code of conduct, B&Q managerial level will each provide inputs and opinions based on the organization’s mission and values on what and how to write down.

Once drafted, the Head of Human Resource Department will read it through and request for any necessary adjustments. Once finalized, the Chairman or Head of B&Q will give the approval to codified and disseminate the code of conduct to all the vendors. 4. Internalization – Vendors will then read the instructions and ensure all CFPs are met. For any areas which fail to comply, site management of the vendors will then follow the guidelines to make changes and improvements. Figure 1: SECI model of knowledge creation Source: Nonaka & Toyama (2003)

However, Nonaka SECI framework downplays the difference of interest, power and political dynamics which people and organizations face everyday. Thus, during an economic crisis, B&Q may approach innovation differently due to the uncertainty and adversity faced in a crisis. According to Tsoukas (1996) and Schauer (1991), even though organizations can make assumptions and obtain knowledge from previous economic crisis where similar conditions are seen, the formulate strategy may not work perfectly according to what the organizations believed as there are still uncertainty.

Meaning to say, a strategy used in a crisis five years ago may not generate the same result due to the difference in technology, people’s mindset and other relating conditions. B&Q need to adopt practice of knowledge during a crisis as information may not be readily available since people and other organizations are wary and may not disclose essential information in order to survive the crisis. With competition between rival organizations getting tougher, B&Q needs to learn, practice and embodied skills and knowledge which increases their chance of survival (Barnett & Burgelman, 1996).

As mentioned by Hitt et al (2007), a multilevel research approach to encourage employees to have better understanding of the strategy implemented by B&Q management. Hence, B&Q through providing an enabling context, B&Q allow its employees to do things differently and better. For example, when selecting their vendors, B&Q can not just rely on which vendor is able to adhere to its code of conduct. B&Q also need to look into the pricing, capability and other characteristic of the particular vendor.

B&Q vendor management team need to have further dicussion with sales, procurement and operations team to gain their opinions and views on which vendors to select. With the current vendors, B&Q need to adopt open communication and discuss with them on how the crisis is affecting their perfomance and compliance towards the code of conduct. Another example is due to the crisis, a vendor had to lay off several staff and workers due reducing their headcount. Hence in order to meet B&Q rders, the vendor’s workers may need to work extra hours which is over the local law. Through discussion, B&Q may allow the vendor to carry out the new process until the economy stablize and the vendor is able to employ more workers.

Stoneman (2010) mentioned that “product, process and organizational innovation are socially and politically mediated processes”. This means that through social relationship and even political standing in an organization; product, process and organizational innovation are being conceptualized.

Jackson (2001) noted that the real-world issues and situations do not match up to traditional disciplinary boundaries due to the inequality in the capitalist world. Therefore, trust and power play an essential role in the development of knowledge and innovation. Internally at B&Q, their managers may see themselves as the authority towards process and organizational innovation. For example, a manager has the power to decide on how his department should be run in order to meet the department and organization goals.

And through his relationship and interaction with the staffs, he may perceive a staff as capable if able to follow the process and excel in it. Hence, to gain trust and acknowledgement, employees compete and motivate each other to do better at what they do and also provide suggestions to the manager on improving certain situations or issues. As highlighted by Hardy and Dougherty (1997), depending on the organization’s culture and its board of management, resource power and process power can either work against or aligned with innovation.

However, without meaning and a direction to support the need for innovation, people will notbe motivated to innovate. For example, the warehousing staffs at B&Q may face difficulties in picking the correct product. Thus, with its power, the warehouse manager can arrange a group discussion with the warehousing team leaders and their IT department to create a new process whereby the product are bar-coded and connected to a system which will provide the product information when it is scanned.

Externally, when working with their supply chain members such as customers and suppliers, B&Q managers can use either its power or trust to ensure compliance are met by the suppliers and customers continue to purchase from B&Q. For example, the board of management has the authority to continue or discontinue the services of a vendor depending on its compliance and performance. However, during an economic crisis where risk and uncertainty are faced, B&Q managers may react to similar situation or innovation differently.

B&Q decisions on innovation, processes and products are affected by four types of distance – time, technological, social and cultural.

Time Distance

Due to the changes in time, environment and conditions, certain processes or procedures that B&Q managers created may not be applicable in an economic crisis. Moreover, the decisions B&Q managers made in a previous crisis are also not applicable even though the conditions are similar because there is still uncertainty whether the outcome would be the same.

The finance department will be more guarded on the expenses and budget thus setting a more thorough process of other departments to ensure waste are minimized and costs are low. In a study done by Hardy and Dougherty (1997), innovators or managers in an anti-innovation environment would solve their problems through methods and ways which hamper innovation whereas in a pro-innovation environment, innovators are able to incorporate the organization’s resources, processes and meaning to develop an more suitable and effective product.

Thus, in relation to the crisis, B&Q managers may tackle a deparment issue by pushing away the problematic function and work its way around it.

Technological Distance

As ICT becomes highly advanced, B&Q need to be selective of the information and tacit knowledge that is available widely. This is because not all tacit knowledge is applicable to B&Q’s strategy and that an overflow of information will result to overloading and poor decision making. Through market and technology knowledge, innovators are able to examine problems, communicate and collaboratively develop new products for the organization (Dougherty et al, 2000).

However, in an economic crisis, technology knowledge that is necessary for innovation may not be readily available or cost effective to the organization. Faced with uncertainty, B&Q board of management may decide to take on a survival mode concept and develop process such as budget control to restrict unnecessary cost and waste. Thus, if an innovator in B&Q requires a certain technology to assist in its development of new product, he need to go through many levels of strict procedures in order to attain approval.

Social Distance

During an economic crisis, organizations face many problems and situations as they try their hardest to survive and go through the crisis without a major disruption or impact. Due to the uncertainty and risk, managers need to respond quickly and effectively. Even in a crisis, Jackson (2006) noted that managers need to ensure their processes are efficient and effective, staffs are motivated and knowledge is created and enhanced. This is to ensure that the organization is constantly better than their rivals thus surviving the crisis.

While ICT and innovation should still move on in a crisis; being a regimental organization; B&Q managers follow routine and have the power to make innovation unlawful through rewarding short-term results, punishing mistakes and even not rendering the support needed for innovation (Hardy & Dougherty, 1997). Not only does this kills innovation in B&Q, the staff would also be less motivate to innovate as they unable to relate a specific project with B&Q’s strategy (Van de Ven and Polley, 1992; Hardy and Dougherty, 1997; Dougherty & Heller, 1994).

Hence, B&Q board of management need to re-evaluate its organization strategy and procedures if it wishes to maintain in the industry. Jackson (2006) suggest organizations to adopt creative holism which is a set of guidelines that are multi-paradigm, multi-methodology and multi-method in nature. Through holism, organizatons look at the situation at a macro and organizational level, thus assuring that the departments are connected and performing together as a whole.

Dougherty et al (2000) explained that since organizational knowledge and learning involves many different processes, a focal point or objevtive is essential to ensure one is taking the right path. Pelz and Andrews (1966) recognized that the efforts to combine and link market and technology knowledge across and throughout the organization is often met and filled with tensions. Thus, B&Q need to incorporate these two factor and be less rigid if it wishes to produce and gain new ideas, products and processes (Weick and Westley, 1996).

Cultural Distance

Kingfisher plc, the parent company of B&Q, is a United Kingdom (UK) based retailer that offers do-it-yourself (DIY), home decorations and home improvement products to their 6 million customers (Kingfisher, 2012). To meet their international market and demand, Kingfisher plc has overseas sourcing offices in India and Poland that act as a supplier to B&Q. To ensure these strategies and structure is maintain in other country, Kingfisher plc has to train its overseas employees, make them understand and cultivate the Kingfisher plc working culture.

However, this will be a tough challenge for example, in India due to the poor education and different socio-culture. Thus, Kingfisher plc needs to accommodate its Western working culture with India working culture, but without losing its main mission and strategy. To ensure this is executed properly, Kingfisher plc needs to obtain a specialist in the Indian market and culture. An economic crisis affects countries differently, depending on where the crisis originates.

However, due to globalization, a crisis in the European Union (EU) nations will have a ripple effect, thus affecting neighbouring countries and countries that depend on the EU economy and market. Likewise, if an economic crisis hits India where one of B&Q suppliers is located at, B&Q need to gather information and data from news reports and the India supplier’s representative, and analyse the data before making a decision on how to overcome the crisis and what B&Q should do to ensure that the crisis in India do not disrupt the entire supply chain.

To ensure accurate and timely information and knowledge is recevied, Swan and Scarbrough (2005) suggest organizations to adopt a networked innovation process where the innovation procedures is collaborated in the network arrangements within and between organizations (Alter & Hage, 1993; Owen-Smith & Powell, 2004; Powell et al, 1996). B&Q needs to view networks as a means of communication where knowledge and information are disseminated (Swan & Scarbrough, 2005) and thus, adopting a open sharing concept where individuals and groups are allow to interact and exchange knowledge and information.

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