The Irizar Company’s Innovation Implementation

Subject: Case Studies
Pages: 6
Words: 1448
Reading time:
6 min
Study level: College


Businesses need to create a continuous innovation process to create a competitive advantage. Establishing a knowledge management (KM) strategy is a crucial way of achieving this objective. This is a process of innovation that involves knowledge creation and transmission. Irizar involves its employees in decision-making processes with the help of more radical changes. The firm bases its strategy on the important aspects of people’s participation, shared leadership, and customer focus. Organizational changes were undertaken to support the strategy and enhance the achievement of knowledge creation, storage, dissemination, and application. Work was organized into multidisciplinary teams that were self-managed to help in the creation of knowledge through active participation by members.


Businesses and organizations continuously base their survival on their ability to innovate and build effective competitive advantage. New skills and ideas improve the performance of an organization in terms of the quality products or services rendered. Organizations are adopting knowledge management in various ways, including teamwork and establishment of organizational structures that support the total participation of all workers in the organization. This paper elaborately analyzes the knowledge management process at Irizar. Irizar is among Europe’s leading companies in the assembly of luxury coaches. The firm has managed to register significant growth in its operations and business as a result of incorporating a knowledge management strategy that has helped it create a competitive advantage.

How the Knowledge Management Strategy led to Innovation and Competitive Advantage

Irizar’s knowledge management strategy was initially formulated to focus on the three important aspects of customer focus, the acceptance of a radical change model, and shared leadership. Equally, the main orientation of Irizar’s strategy was to gain knowledge, serve, as well as provide value to the customers. These important foundations offered the guidelines for attaining innovation for the company and the development of competitive advantage. It enabled Irizar to be viewed as a project that had its focus placed on achieving innovation and the creation of knowledge.


Irizar replaced its previously existing functional structure with a new organization that relied on processes. This new arrangement saw work teams being given a greater role to perform their functions. The new structure adopted reduced the hierarchy levels to enable the teams to operate successfully. The new organization chart is almost flat since the number of levels in the hierarchy was reduced.

The influence of the new structure is in offering individual workers the opportunity to involve themselves fully in making their contributions to the organization. Time controls have been abolished, and supervision is executed within individual teams to obtain improvement, as well as meeting the time limits, among other objectives.

Human Resource

Irizar integrated into its culture an important principle that observed the great importance and contribution of people towards achieving the anticipated strategic objectives. The main idea of the human resource at Irizar was to strongly encourage participation from individual workers. In particular, the work teams, more so the line-customer teams offered the system through which participation of workers in the organization was articulated. The work teams are in charge of performing work and undertaking the support jobs that are tied to the implementation of the strategic goals.

The teams are made to be highly dynamic and closely related to the customers and suppliers to enhance the achievement of innovation. There is a general feeling among the workers that they are fully involved in the day-to-day running of the organization. The work teams have played a critical role in creating a shared view about the problems being faced by the firm because of this extent of motivation. This system has also enhanced the transmission of knowledge in a more simplified way. The management at Irizar strongly believes in this arrangement in the hope that the ability of the workers to create more knowledge is enhanced when they have a greater shared experience.

Leadership style

The firm’s leadership style has been retained as that of promoting the initial process and offering support to ideas because the teams have taken over the role of making decisions at Irizar. There is more participative leadership at the firm, with at least 20 percent of the workers leading and coordinating the teams at some time.

There is greater participation from all the workers in developing strategy. This is by Irizar’s co-operative principles. A coordinator has been assigned to oversee this, with the organization holding at least three assemblies annually. All members are expected to attend the assemblies to help in fixing the strategic objectives.

Corporate Culture

The company has worked towards building participation and trust as the most important values. The assembly system is used for making decisions and encouraging participation as the most appropriate channel in determining the organizational goals and strategies. The active participation of the entire workforce in creating and transmitting knowledge within the working teams has formed a critical cultural value.

Irizar’s corporate culture is best explained by the fact that it belongs to the MCC. This comprises of various co-operatives that have come together voluntarily (Forcadell, 2000). This is an important aspect as it determines how decision-making is done, focusing more on democracy in as far as the delegation is concerned. The main aim of the co-operative philosophy is to help in overcoming the capital-worker confrontation and ensuring the individuals involved, mainly the workers, are co-owners. This also makes them be the co-participants in as far as the decisions of the company, and the results are concerned.

The importance of knowledge management and leveraging of organizational capabilities in creating an innovation culture

As Liebeskind (1996) points out, knowledge as a concept incorporates capabilities, abilities, technology application, and structured information. All these aspects have the potential of improving products and processes, thereby generating a competitive advantage. The knowledge generated can partly be explicit, thereby enabling its easy storage and transmission. Equally, tacit knowledge that cannot be separated from the individuals who own it is created. Knowledge is an important resource that is strategic for the running of any organization. Its scarcity, relevance, cost, and difficulty when it comes to imitation make it a critical resource for any organization.

The knowledge management process in itself involves collecting, distributing, and using knowledge resource efficiently (Davenport, 1994). It is a strategy aimed at enabling knowledge generation and transfer at the most convenient time to the right people. An organization can share the information at hand with its people for purposes of improving its functioning. The information that is gathered and the potential that is enhanced are assessed by the organization before being transformed into valuable results. A progressive learning process is also set up in the firm.

Coming up with novel knowledge is seen as the critical source of any innovation in the organization. It has been upheld that firms need to keep replenishing knowledge to ensure that the knowledge base does not run out with time (Jennex, 2007). New knowledge that forms the basis for any kind of innovation will eventually make up the organization’s future knowledge base. It also enhances the regeneration, as well as the widening of the presently existing knowledge base.

Several critical features constitute the organization’s technological innovation process. These include an implication of both uninterrupted and intensive co-operation, on the one hand, and the interaction between groups that are specialists in the functional and professional aspects, on the other hand. In other words, it includes research and development activities, production, and marketing. It also includes finance and organization as part of the strategic decisions required when venturing into new business areas.

Another important feature involved includes various activities with uncertain kind of results. Additionally, the whole process is cumulative, whereby the significant aspect of technological knowledge remains specific. The organization must have a comprehensive assimilation capability in place, despite the existence of room for this kind of knowledge and abilities to be acquired from the exterior. The final aspect of the technological process for the organization is differentiation. It is pertinent to have a significantly differentiated process to enhance the transfer of technological know-how between fields.


Knowledge management strategy is an important aspect that enhances business performance in organizations. Irizar’s innovation in business and general operations has been influenced by the company’s ability to adapt to the knowledge management strategy successfully. The company revised its traditional organizational structure with a new type of structure that minimized the number of structural levels in the organization. It also emphasized a new human resource policy that granted individual workers adequate room and opportunity to participate fully in the day-to-day running of the organization and its other important activities. A new leadership style was also adopted to focus on directing and advising the groups within the organization during their execution of roles.


Davenport, T. (1994). Coming soon: The CKO. InformationWeek, 491, 95-95

Forcadell, F. J. (2000). Success in the practical application of cooperative principles at Spain’s Mondrago´n Coopera-tive Corporation. National Productivity Review, 19(3), 59–71.

Jennex, M. E. (2007). Knowledge management in modern organizations. Hershey, PA: IDEA Group.

Liebeskind, J. P. (1996). Knowledge, strategy, and the theory of the firm. Strategic Management Journal, 17(1), 93–107