* * *

The Knowledge-Creating
Company
How Japanese Companies Create the
Dynamics of Innovation

November 28, 2011

UOKM
H. Wang
Table of Contents

Ch.No Title of content

1. Introduction to Knowledge in Organizations

2. Knowledge and Management

3. Theory of Organizational Knowledge Creation

4. Creating Knowledge in Practice

5. Middle-up-down Management Process for Knowledge Creation

6. A New Organizational Structure

7. Global Organizational Knowledge Creation

8. Managerial and Theoretical Implications

/ References

UOKM
Hanjun
Ch.1 Introduction to Knowledge in Organizations UOKM
Hanjun

The new focus on “knowledge” as a competitive resource

Uncertainty → fear → changes → knowledge creation → continuous

innovation → competitive advantage
The distinctive Japanese approach to knowledge creation
Explicit/tacit knowledge Tacit knowledge → explicit
The distinction is the key knowledge → tacit knowledge →
knowledge creation

Three key characteristics of

knowledge creation that relate to
how tacit can be made explicit
1) To express the inexpressible
2) To disseminate knowledge among
individuals
3) New knowledge is born in the
midst of ambiguity and
redundancy

The Honda City Example

Ch.2 Knowledge and Management UOKM
Hanjun

Western:
What is Knowledge? Justified true
belief. There are two traditions of
mutually
Western epistemology: complemen-
• Empiricism: Aristotle, Locke,
tary
etc.
• Rationalism: Plato, Descartes,
etc.
Synthesize the two: Kant, Hegel,
Marx, etc.

Oneness of … From what kind of Japanese intellectual traditions

Humanity/Nature a unique view of time and space
Body/Mind the ultimate ideal condition that Zen
practitioners seek
Self/Other the Japanese language
 Ch.3 Theory of Organizational Knowledge Creation
UOKM
Hanjun

Organizational knowledge creation

Organization’s innovation: an outside-in and inside-out process

The key to knowledge creation: tacit knowledge
The engine of the knowledge creation process: four modes of
knowledge conversion

5 conditions
Tacit knowledge Explicit knowledge
to 5-pased model
knowledge
Tacit

(Socialization) (Externalization)
Sympathized Conceptual
Knowledge Knowledge

from

(Internalization) (Combination)
knowledge
Explicit

Operational Systemic
Knowledge Knowledge
Ch.4 Creating Knowledge in Practice

Matsushita Electric

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Hanjun
Ch.5 Middle-up-down Management Process for UOKM
Knowledge Creation Hanjun

Top-down model:
pyramid / top managers / combination /
internalization •Practitioners
•Engineers
Bottom-up model: •Officers
flat & horizontal / front-line
employees / socialization /
externalization Knowledge Creating Crew
Limitation:
ignoring middle managers

Middle-up-down management
Knowledge is created by middle managers, who
are the key to continuous innovation
Main job of middle managers: orient chaos
toward knowledge creation
Advantages: who/what/where/how
Ch.6 A New Organizational Structure UOKM
Hanjun

“Hypertext”

 To create K. efficiently and continuously, which should has

oscillated between two basic types: bureaucracy and task force.
 Attempt case: U.S. military (bureaucracy + task force) and
Japanese army & navy (bureaucracy) in WWII

 Advantages:
• bureaucracy + task force
• Knowledge base: the
“clearinghouse”
 Key characteristics of a
hypertext organization: the
ability of its members to shift
contexts, moving easily in and
out of one context into another

Failed to “unlearn” past

success factors
 Ch.7 Global Organizational Knowledge Creation

Differences between the Japanese and Western approaches

The interaction between tacit and

explicit knowledge: individual VS
group

Emphasis on: explicit VS tacit

Certainty VS ambiguity

“knowledge specialists”

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Ch.8 Managerial and Theoretical Implications
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Hanjun

7 guidelines (organizationally)

1. Create a knowledge vision 5. Adopt middle-up-down management

2. Develop a knowledge crew
3. Build a high-density field of
interaction at the front line
4. Piggyback on the new-product
development process
6. Switch to a hypertext organization
7. Construct a knowledge network with
the outside world

7 dichotomies (theoretically)

1. Tacit/explicit 5. Bureaucracy/task
2. Body/mind force
3. Individual/organi 6. Relay/rugby
zation 7. East/west
4. Top-down/bottom-
up
References

• A review and critique of Nonaka and Takeuchi’s theory of

organizational knowledge creation
http://mcleanglobal.com/public/MGC/publications/Nonaka%20and%20T
akeuchi.pdf
• Nonaka SECI model http://editthis.info/jsarmi/Nonaka_SECI_Model
• Nonaka’s knowledge model
http://www.youtube.com/watch?v=p_FcJaknptY
• Nonaka & Takeuchi - Seci, Ba & Knowledge Assets
http://paei.wikidot.com/nonaka-takeuchi-seci-ba-and-knowledge-
assets
• A graphic depiction of Nonaka’s & Takeuchi’s theory on knowledge
creation
http://usineaprojet.wikispaces.com/file/view/km_beckwith.pdf
• The Big Idea: The Wise Leader
• http://hbr.org/2011/05/the-big-idea-the-wise-leader/ar/1
• Wise leadership http://www.youtube.com/watch?v=Rp-cjRhWoV0
• Knowledge management in times of social media
http://www.youtube.com/watch?v=qnfYzKiW50Q
UOKM
Hanjun
Thank you!

Hanjun Wang
Nov.28,2011

UOKM
Hanjun