knowledge creating company s (learning organization)

Theory of Organizational Knowledge Creation

Excerpted from the book by

Ikujiro (Jiro) Nonaka

and Hirotaka (Hiro) Takeuchi

The Knowledge-Creating Company

Oxford University Press

1995

04/11/2023 [email protected] 2

Organizational Knowledge Creation

• Creating organizational knowledge is as much about bodily experience and trial and error as it is about mental modeling and learning from others.

• The capability of a company as a whole to create new knowledge, disseminate it throughout the company, and embody it in products, services and systems is the root of continuous competitive advantage.


Knowledge

• Business organizations don’t just process knowledge, they create it as well.

• Knowledge creation by the business organization has been virtually neglected in management studies.

• Explicit knowledge and tacit knowledge are the basic building blocks in a complementary continuous dynamic interaction/conversion.


Human Knowledge

• Explicit knowledge can be articulated in formal language including grammatical statements, mathematical expressions, specifications, manuals and so forth.

• Tacit knowledge is hard to articulate with formal language. It is personal knowledge embedded in individual experience and it involves intangible factors such as personal belief, perspective and the value system.


Tacit Knowledge

• Knowledge expressed in words and numbers is only the tip of the iceberg. Tacit knowledge is not easily visible and expressible. It is highly personal and hard to formalize, making it difficult to communicate and share with others.

• Subjective insights, intuitions, and hunches fall into tacit knowledge, which is deeply rooted in individual action and experience, as well as in the ideals, values and emotions he or she embraces.


Tacit Knowledge

• Two Dimensions of Tacit Knowledge– The technical dimension, which contains the kind of

informal and hard-to-pin-down skills or crafts captured in the term “know-how.” A master craftsman is often unable to articulate what he knows.

– The cognitive dimension, which consists of schemata (cognitive schemes), mental models, beliefs, and perceptions so ingrained that we take them for granted. It reflects our image of reality (what is and ought to be)


Explicit/Tacit

• Distinctions– The distinction between explicit and tacit is key to

understanding the difference between Western and Japanese approaches to knowledge.

– Explicit knowledge can be processed by computer, but the subjective and intuitive nature of tacit knowledge makes it difficult to process in any systematic or logical manner.


Explicit/Tacit

• Distinctions – For tacit knowledge to be communicated and

shared within an organization, it has to be converted into words and numbers that anyone can understand. It is during this time of conversion, from tacit to explicit, and back again into tacit, that organizational knowledge is created.


Tacit Implications

• Whole different view of the organization– Not as a machine for processing information, but as a

living organism.• Whole different view of innovation– Not a putting together of diverse information, but a highly

individual process of personal and organizational self-renewal – ideals not ideas.

– The essence of innovation is to re-create the world according to a particular ideal or vision.


Tacit Implications

• Whole different view of knowledge– Not acquiring, teaching, training.– But less formal – metaphors, pictures, experiences, mental

and physical transitions.

Knowledge Creation


2

Common cognitive ground, Dialogue over and over,Sharing overlapping information,Internalized by employees

Metaphor (alike) Analogy (alike and not alike)

Pure Imagination

Logical Thinking

From personal to organizational

New Points of View

Conflict and Disagreement

Discussion and Dialogue

Ambiguity Redundancy

New sense of direction, Alternate meanings,Fresh way of thinking,New knowledge out of chaos

1

3

“You have to feel it…”



Japanese Companies

• Organizational knowledge creation is the key to the distinctive ways that Japanese companies innovate. They are especially good at bringing about innovation continuously, incrementally, and spirally.

• Their success is not due to access to cheap capital; or manufacturing prowess; or cooperative relationships with customers, suppliers, and government agencies; or lifetime employment and seniority systems – though these factors are important.


(Western) Epistemology (Knowledge)

• Cartesian Split:– Subject (the knower) and Object (the known)– Mind and body/matter/nature

• And opposing traditions:– Rationalism• “True knowledge is not the product of sensory

experience but some ideal mental process.”– Empiricism• “The only source of knowledge is sensory experience.”


(Eastern) Epistemology (Knowledge)

• Oneness of humanity and nature– Think visually and manipulate tangible images– Time as a continuous flow of “present”

• Oneness of body and mind– Wisdom is acquired from the perspective of the entire

personality– Knowledge is integrated into one’s personal character

• Oneness of self and other– Exist among others harmoniously as a collective self– You and I are two parts of a whole


Organizational Culture

• Studies have shown the importance of organizational values, meanings, commitments, symbols and beliefs, and recognized that the organization as a shared meaning system, can learn, change itself, and evolve over time.

• But these studies have not paid enough attention to the potential and creativity of human beings. The human being is seen as an information processor, not as an information creator.


Organizational Culture

• A major target for research in organizations today is to understand how organizations acquire new products, new methods of manufacture and marketing, and new organizational forms.

• A more fundamental need is to understand how organizations create new knowledge that makes such creations possible.


Knowledge

• Knowledge (unlike information) is a function of: “a particular stance, perspective, or intention.”

• Knowledge is anchored in: “the beliefs and commitment of its holder.”

• Knowledge (unlike information) is always: “to some end.”

• Knowledge is: “essentially related to action.”


Knowledge Conversion

• Westerners tend to emphasize explicit knowledge, Japanese tend to stress implicit, but tacit and explicit are mutually complementary entities.

• They interact with and interchange into each other in the creative activities of human beings.

• Knowledge is created and expanded through social interaction between tacit knowledge and explicit knowledge.

• This interaction is called Knowledge Conversion.


Four Modes of Knowledge Conversion

Socialization Externalization

Internalization Combination

TACITEX

PLIC

ITEXPLICIT

TACI

T


Socialization Externalization

Internalization Combination

TACIT

TAC

ITEX

PLI

CIT

EXPLICIT

“fusion of participants’ tacit knowledge into a shared mental model”

Subjective insights, intuitions, and hunches fall into tacit knowledge, which is deeply rooted in individual action and experience, as well as in the ideals, values and emotions he or she embraces.

…involves intangible factors such as personal belief, perspective and the value system.

…shared “know-how”

…metaphor, analogy, brainstorming…

Articulating tacit knowledge into explicit concepts.

Writing is an act of (often inadequate) converting into explicit knowledge.

Concept creation triggered by dialogue or collective reflection.

The key to knowledge creation.

Conversion in a sequence of metaphor, analogy, and model.

Creating new, explicit concepts from tacit knowledge.

The process of systemizingexplicit concepts into a knowledge system.

Combining different bodiesof explicit knowledge throughdocuments, meetings, phoneconversations, or computerizedcommunication networks.

TACIT TO TACIT TACIT TO EXPLICIT

EXPLICIT TO TACIT EXPLICIT TO EXPLICIT

Reconfiguring existing explicit knowledge through sorting, adding, combining, (like with computer databases) can lead to new explicit knowledge.

An MBA education, for example

Embodying explicit knowledge into tacit knowledge.

“learning by doing”

The internalization of experiences throughsocialization, externalization, combination and trial and error is an explicit to tacit conversion.

Internalized knowledge experiences

You can “re-experience”what other people experience

Knowledge CreationFIVE PHASES

FOUR MODES

Socialization Externalization Combination Internalization

Sharing Tacit

KnowledgeCreating Concepts

Building an Archetype

Cross-Leveling of Knowledge

JustifyingConcepts

ENABLING CONDITIONS

Intention

Autonomy

Fluctuation and Creative Chaos

Redundancy

Requisite Variety



Veritas


Thank You!