The Epistemology of Resilient Organizations

Implications for Business Continuity Management

Eva Gatarik

, Viktor Kulhavý

and Rainer Born

Department of Corporate Economy and Management, Faculty of Economics and Administration,

Masaryk University, Lipová 41a, Brno, Czech Republic

Institute of Philosophy and Theory of Science, Johannes Kepler University, Altenberger Straße 69, Linz, Austria

Keywords: Organizational Performance, Organizational Epistemology, Organizational Resilience, LIR (Language -

Information - Reality) Framework of Analysis, Business Continuity Management (Case Study).

Abstract: Pointing out flaws and errors can be a risky pastime for those employees, whose information conflicts with

theories and rules held dear by management. However, effective performance does not consist in strictly

adhering to established rules. Instead, it is driven by a continuous search for meaning within organizational

environments, which are, in turn, enacted upon emerging and redrafted meaning. Meaning based upon lived

and reflected experience provides a corrective use of rules and, hence, more appropriate, effective results.

Effective performance arises out of plausibility rather than accuracy. In the event of uncertainty,

equivocation and doubt, people in organizations claiming resilience should jointly classify and interpret

observed data into new knowledge so that subsequent action can tap into the prevailing business climate,

reduce ambiguity, and offer more exciting prospects. A framework is introduced and applied to justify an

organizational epistemology to assist the construction, processing and justification of meaning within

organizations.

1 INTRODUCTION

Despite several insightful empirical studies on how

effective performance is created in organizations,

there is still no satisfactory answer to the question:

How is effective performance created in

organizations?

The purpose of this paper is to address this

question by focusing on a theory of successful

organizational practice, and the application of that

theory.

The following argument is advanced. Taking up

a case of redevelopment and since then effective

performance in an Austrian SME, it is argued that

the success of that enterprise is explained by the

enacting and management of four selected

knowledge components. These components

comprise expertise, competence and capabilities in

their operational influence upon effective

performance, as well as an explanatory meta-

theoretical reflection.

The structure of this explanation is generalized

into a sort of holistic framework “for the analysis,

the guidance and evolution of actions to be taken”,

concerning the relation between (not only but

primarily) language, information/meaning, and well-

selected parts of reality.

2 FRAMEWORK OF ANALYSIS

In the literature related to organizational

performance, there are primarily descriptions

available, leaving everything as it is. In the sequel, it

is argued that via introducing and using the model-

theoretic systemic framework of analysis Language-

Information-Reality (LIR), there also would be a

chance to explain and predict both mischief and

success of an organization. Furthermore, it could be

identified in which way a holistic understanding of

the creation of knowledge, and its influence on

expertise, competence, and capabilities, could both

change the current situation in the related research,

as well as produce and reproduce in a controlled

manner long-enduring effective organizational

performance, resting upon overcoming or overruling

established organizational presuppositions and

assumptions, or – put differently – upon overriding

established organizational rites.

Gatarik, E., Kulhavy, V. and Born, R..

The Epistemology of Resilient Organizations - Implications for Business Continuity Management.

In Proceedings of the 7th International Joint Conference on Knowledge Discovery, Knowledge Engineering and Knowledge Management (IC3K 2015) - Volume 3: KMIS, pages 93-97

ISBN: 978-989-758-158-8

Figure 1: The LIR framework of analysis, depicting the scissors of meaning.

The technique at the bottom of the framework

LIR is a multi-dimensional form of mapping based

upon model theory and a multi-component formal

semantics. The force behind are both the ideas of

classical systems theory, as well as the semantic

approach to a theory of truth, originating in research

starting with Alfred Tarski and others.

The framework LIR is covered in more detail in

Born and Gatarik (2013). Its shortcut in Figure 1 can

nevertheless be used to highlight that we cannot

reduce expertise (E) to rules/heuristics (K) in such a

way that the latter showing up as the competence of

an organization can be used causally and applied to

solve problems (P ==> Q) in an acceptable way by

just applying ordinary, unrefined and unchanged

common sense knowledge (F), i.e. capabilities, also

with respect to collective understandings (Tsoukas

and Vladimirou, 2001).

Instead, it is essential to enhance the epistemic

resolution level of users with common sense

knowledge (F), which holds true for the

management and their theories as well, by way of

enhancing F to some F* in order to be able to solve

problems P in an inventive, flexible and acceptable

way, in symbolic terms: <K|F*> (P) ==> Q* in a

way such that the solution Q* is not an element of

the set of solutions [Q] produced by <K|F> (P) ==>

Q*, and thus to create a competitive advantage and

be successful in the long-run.

Drawing on a variety of theoretical sources it is

argued, and portrayed (Tsoukas, 2011) with the help

of a case study, that such an extension from F to F*

can be accomplished via an explanatory reflection (a

sort of view from outside) in M to be able to achieve

or provide a proper change from F to F*, and thus to

establish and support the controlled reproducibility

of effective organizational performance.

In Figure 1, there is also designated the influence

of background knowledge component E versus F

both upon the production of acceptable or intended

results or problem solutions Q as well as the

acceptance of Q as scissors of meaning. If there can

be identified different local epistemic resolution

level in E and F as one of the causes, leading to

suboptimal (managerial) decisions (formally

depicted as: H; S  R), then we can also understand

why the reduction of decisions to rules K has its

limits. Therefore, a guided instantiation of dialogue

(in the sense of David Bohm) within organizations is

suggested that allows to translate knowledge from E

KMIS 2015 - 7th International Conference on Knowledge Management and Information Sharing

to F or rather to build up some extension or

enhancement F* (Tsoukas, 2009). This can lead to

better decisions in the long-run due to an evolved

ability to evaluate future consequences in particular

on the part of management.

Reasoning about the knowledge gap between E

and F might also help to close a corresponding gap

between theory and the so called organizational

practice with its own local theories or rites of

rationality (Foucault, 1970; O’Leary and Chia,

2007). The latter expresses itself in the acceptance of

[1] the proposed or produced solutions Q, [2] the

means, i.e. the rules, structures, expertise, etc., that

produce Q, and [3] the justifications for what is

proposed to be taken to generate Q (in the scheme

LIR sometimes indicated as three levels of

reflection).

3 CASE STUDY

A case study may serve to illustrate the case in point.

It was developed at Beham Techn. Handels GmbH,

an Upper Austrian SME specialising in the

production of precision metal parts since 1948. The

LIR framework was employed as the main means of

analysis in a description of re-modelling Beham’s

processes of decision and action in such a way as to

enhance organizational performance in terms of

creativity, flexibility and innovation in the long run.

Some years ago, Beham encountered massive

financial difficulties. Their budget was simply

unable to cover future payments (problem situation

P represented in S as “red numbers”). It was clear

that sustainable solutions in this case could not rest

upon one-dimensional, monetary representations of

knowledge following by measures like closing down

divisions not belonging to the core business,

abandoning unprofitable branches, or avoiding

extraordinary, inherently one-off processes, although

such a solution might appear to be calculable and

accessible to plausible representation.

In other words, the management realized that partial

(e.g. economic) explanations and suggestions for

action derived from the former in a non-reflective

way need to be overcome (overruled) and replaced

by fresh practical problem solving ideas (H; S  R)

based upon a sort of enactment of a joint meta-

Figure 2: Enacting expertise, competence, and capabilities via joint meta-reflection in M towards effective performance,

embedded into the meaning transfer supportive corporate culture at Beham GmbH, depicted in LIR, indicating the three

levels of reflection and the scissors of meaning, handled by dialogue between experts in E and users in F towards enhancing

the epistemic resolution level of F to F*.

The Epistemology of Resilient Organizations - Implications for Business Continuity Management

reflection (M) of problem situations (P) in the

concrete causal organizational context (P ==> Q),

see Figure 2.

However, the quality and innovativeness of the

Beham solutions depended on more than just the

implementation of knowledge component M by way

of a management team; extended involvement of the

content of the other three knowledge components of

the LIR scheme allow comprehensive knowledge of

the enterprise to be taken into account. The precise

selection of the members of the management team

has ensured that they also convey the particular

perspectives and challenges generated by their

various departments (in terms of E) to the decision-

making process. In addition to this, these experts

have provided an excellent interface with other

employees, whose aspirations and opinions

(knowledge component F) could thus be said to have

been represented at team meetings. Finally, through

the special use of a sophisticated information system

K and the extensive experience of an IT specialist as

a one of the eight members of the management team,

even more significant information has been shared.

Further, the members of the management team may

also perform and even adjust the various knowledge

roles that form the essential theoretical backbone of

the LIR scheme. When addressing the topic

discussed and the situation, they play a number of

roles: they may be specialists – experts; they can

provide general knowledge and life experience; they

may think and argue in both procedural and

regulatory terms; and they may provide certain

reflective external perspectives.

This kind of thinking together and learning from

each other is explained by, and rests upon, the LIR

framework initiated at Beham GmbH as a theoretical

backbone for sustainably effective organizational

performance. This framework provides guidance for

the actions, evaluation and understanding on the part

of the employees. However, although the specific

direction the enterprise should take is indicated, the

employees themselves are granted local autonomy to

find ways of maintaining that course.

From the corporate-financial point of view, the

positive effects of the re-modelling at Beham GmbH

may be selectively summarised after eight years.

The company turnover has increased threefold;

Beham has been listed as the most successful

enterprise of those in which the participating private

equity-fund had ever invested (proportional to size);

and the capital invested by outside parties has been

superseded by internal equity capital generated over

the eight years. Moreover, after the re-modelling

Beham has been the recipient of several business

awards, among them the international Best Business

Award for Sustainable Management, Europaregion

Donau-Moldau, in 2014. The rating criteria were

economic success, uniqueness, employee status,

innovative power, sustainability and social

responsibility.

Although space dictates that the Beham case is

not covered in more detail, the case study can

nevertheless be used to highlight that any re-

modelling of an enterprise via LIR requires, inter

alia, outstanding attitudes on the parts of the

managers and employees and an appropriate

corporate culture. These are vital to the reflective

transfer of the analysed approach to other

enterprises.

4 REFLECTIVE CONCLUSIONS

The light was thrown on that it is important not only

to describe the rites of rationality in an organization,

but also to understand the processes going on there

to be able to induce change both in theory as well as

in practice.

In the case study it was the implementation of

the management team as an enactment of the fourth,

explanatory knowledge component M from the

framework LIR.

However, it must also be pointed out that it is not

just the enactment of M which can lead to success.

What is important to take into account is the

population of M and the way in which it can help to

give meaning to documentations, existing or implicit

rules K and to transfer knowledge from experience

and expertise E into an episteme for decision

support via management.

Due to the systemic and model theoretic

background of the framework LIR it might be

summarized and pointed out:

(1) The adding up of the local optimization of

expertise, competence, and capabilities is

suboptimal for the success of the whole (an

organization as such).

(2) In many cases (although not in all) effective

organizational performance does not only

depend on strictly or stubbornly obeying or

applying rules, practices and theories, but on

knowledge about the coming about of

expertise, and about the limits of the

application of those rules, and thus on a

reflective and corrective collective practice.

(3) To reflect the limits of following a rule might

well help to understand constraints and

KMIS 2015 - 7th International Conference on Knowledge Management and Information Sharing

presuppositions about the world we live in, and

thus support an ecological point of view.

(4) Routines should not replace thinking. The

incompleteness of formal systems (Kurt Gödel)

should be taken into account.

Corollary, the integration of organizational and

management practices into the meta-theoretical

framework LIR can facilitate understanding and

controlled reproducibility of those events that are

considered and accepted as examples of effective

performance mirrored in sustainable success,

economic or otherwise.

ACKNOWLEDGEMENTS

This contribution owes a great debt to Dr. Christian

Hochrainer, Beham GmbH, in terms of both

inspiration and execution.

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The Epistemology of Resilient Organizations - Implications for Business Continuity Management