Reading the signs: incorporating knowledge creation within strategy formation to attain performance

This article focuses on the perspective of the strategy process where analysis is not directed towards the alignment per se but rather on the circumstances that lead to the decisions made during the strategy process. MJS is a member of the Conglomerate established in 2011, assigned to be the operator of power generation operations in one of the Group’s assets in Samarinda, East Kalimantan. Considering the preliminary analysis of MJS, a desktop review found two main areas, namely strategy formation and knowledge creation, deemed most relevant to proceed with this study. In this study, we define strategy formation to include the organization context as the basis of decision-actions implemented.Firm strategy formation needs to include proper knowledge processes and enabling factors to ensure that information, both sourced internally and externally, can be converted into knowledge as the basis of strategy selection. A review of the MJS case illustrates a new business organization with a weakness in information processing that led to weak strategy formation and selection of the wrong strategy, leading to failure. Discussions in this article are aimed at building an argument about the inclusion of knowledge-creating capability as an antecedent to strategy formation when developing a new business. This approach allows management to set the tone and embed knowledge creation within the strategy formation. High-performing firms need to be equipped with mechanisms for identifying the signs and acquiring the knowledge necessary to foresee potential threats to new business ventures.