Towards Organizational Knowledge

The Pioneering Work of Ikujiro Nonaka

Kimio Kase,César González Cantón, Kenneth A. Loparo,H. Takeuchi

• Editore: Palgrave Macmillan
• Anno: 2013
• ISBN:
  9781137024961
• Argomento: Business
• Categoria: Gestione dell'informazione

In recognition of Professor Ikujiro Nonaka's contribution to the field of Knowledge Management this book, forming part of The Nonaka Series on Knowledge and Innovation from Palgrave Macmillan, deals with a variety of aspects of the Knowledge Management (KM) theory and the knowledge-based view of the firm.

Part I

1

Nonaka’s Contribution to the Understanding of Knowledge Creation, Codification and Capture

David J. Teece

Introduction

The work of Ikujiro Nonaka has been very influential, both in theory development and in management practice. His deep insights into the process of new product development have shed light on the roles of leaders and middle managers in the knowledge creation process.

Before the 1980s, academic research on knowledge creation was largely limited to studies of industrial research and development, such as the pioneering work of Edwin Mansfield (1968) and others. Strong economic growth in Asia, particularly Japan, demanded a new view of the innovation process. The Japan challenge made clear that organizational and innovation systems very different from those employed by US multinationals could achieve noteworthy results, particularly in terms of incremental innovation.

At the same time, increased technological activity in the newly industrialized countries in Asia and elsewhere created even greater dispersion in the sources of new knowledge and manufacturing excellence. Large companies needed new ways to access and manage knowledge assets residing in different corners of the globe. Whereas some of the offshore knowledge and capability could be tapped through arm’s-length purchases of components, cross-border strategic alliances and offshore R&D were also needed, and their use grew steadily.

In the midst of this global economic transformation, Ikujiro Nonaka provided new frameworks to help managers think about how to share knowledge within the enterprise and develop intellectual capital. His approach was informed by his study of the process of new product development, especially in Japan. Japanese firms, particularly in autos and electronics, had by this time established themselves as formidable competitors in product development and manufacturing.

Nonaka’s contributions to the field of strategic management have helped deliver improvements to management practice in Japan, the United States, and Europe. Although practitioners have not always fully appreciated the profundity of his recommendations, his writings provide valuable insights and his intellectual currency continues to advance.

Knowledge creation

Perhaps most fundamentally, Nonaka (1991) critiqued the view of the firm as an information-processing machine. Instead, the firm should be seen as a knowledge creating entity that reshapes the environment and itself by applying its knowledge.

In this knowledge-centric conception of the firm, individuals matter. They interact with each other to transcend their own limits. Subjective tacit knowledge held by individuals is externalized and shared. New knowledge is socially created through the synthesis of different views. The resulting knowledge can still have tacit elements; in fact, tacit/explicit is best understood as a continuum rather than two opposing states (Nonaka & von Krogh, 2009).

Through Nonaka’s SECI (socialization, externalization, combination, internalization) process, knowledge keeps expanding. The company’s vision for what it wants to become and for the products it wants to produce inspires the passions of employees. This vision of the future must go beyond goals defined by financial metrics alone.

Knowledge creation begins with intuitive metaphors that link contradictory concepts. New knowledge is created by logically working out the contradictions (Nonaka, 1991). In this way, organizations create and define problems that they then solve by generating new knowledge (Nonaka, Toyama, & Nagate, 2000, p. 3). Breakthroughs occur by exploiting and managing what Kuhn (1963) would call ‘creative tensions’ between the old paradigms and the new.

The SECI process is a routine, but it is a routine with a difference. It is a ‘kata’ (way of doing things), a set of practices and interactions (Nonaka & Toyama, 2005). Most routines become calcified and, over time, out of line with changing circumstances. A complete break is then required, so that Nonaka’s routines tend to morph over time. A company’s kata is a creative routine that leads to continuous self-renewal. Each time a pattern is mastered, the process of looking for a better alternative begins.

The SECI process is not mechanical or deterministic. Vision, organizational structure, incentives, and corporate culture are all implicated. Nonaka recognizes that employees, if they don’t identify with the organization, will not necessarily help convert their collective store of tacit and explicit knowledge into something of value. Leadership matters. Good leaders can accelerate the SECI process and make it more productive.

Knowledge codification and capture

At the heart of the SECI process is the conversion of personal tacit knowledge to new, collectively constructed concepts. This is different from codification as conventionally understood, that is, the simple documentation of personal knowledge.

In the SECI process, individual knowledge is shared within a team that has taken the time to build trust. Together, the team develops ‘new perspectives created from shared tacit knowledge’ (Nonaka, 1994, p. 25), which it then ‘crystallizes’ into some kind of output. At this point, upper management must screen the output (for example, a product concept) for consistency with corporate strategy and other standards of evaluation.

Attempts at implementing SECI have been most likely to go astray in their misconception of the externalization phase, that is, the conversion of knowledge from tacit to explicit. Most early knowledge management efforts limited externalization to the generation of ‘discrete declarative knowledge’ (ibid., p. 22) that could be stored in databases or on intranets. But this converts it to ‘information’ rather than ‘knowledge’ (Nonaka & Konno, 1998, p. 41).

Nonaka’s conception of knowledge is less explicit, more deeply rooted in individual experience, and more oriented toward pursuing the firm’s differentiated vision than the information to be found in best practice databases and the like. Shards of knowledge cannot be isolated in a database and later recombined into something useful; the knowledge must be made available in the ‘shared spaces’ in which joint knowledge creation is to take place (ibid., p. 40). These spaces exist within an environment created by managers to foster the goal-directed sharing of knowledge between individuals, within teams and across corporate intranets.

In other words, individual knowledge, to be made useful to the enterprise, cannot be simply captured through documentation requirements. It must be captured by building a collaborative commitment to a shared vision. This is at odds with the claims of many so-called knowledge management software tools.

Management’s role in the knowledge creation process is critical. Nonaka advanced the proposition that firms differ because each firm’s managers are pursuing distinct visions (Nonaka & Toyama, 2005).

Nonaka’s view places an emphasis on the critical entrepreneurial role of managers, which is also at the heart of creating competitive advantage (Augier & Teece, 2009). Good leaders provide a vision and help the organization to synthesize and resolve contradictions that arise in the pursuit of a vision.

Managers and knowledge creation

Nonaka also restored the middle manager to an important role in management theory. In his framework, middle managers provide the vital linkage in knowledge creation inside the organization by bridging the visionary ideals of top management and the chaotic realities of front line workers. Once top managers create a concept of the organization’s future, middle managers bear responsibility for solving the tensions between things as they are and the changes required for top management’s vision to be realized.

This model, which Nonaka (1988) calls ‘middle-up-down management’, puts middle managers in the most entrepreneurial role. The task of top management in this model is to challenge and inspire. It is then up to middle managers to lead teams whose members are drawn from different functional perspectives to engage in the give-and-take of knowledge creation, such as product development. The teams that they lead must be given autonomy to achieve their goals within the limitations imposed by time-to-market constraints and other requirements (Nonaka, 1988).

A team breaks into sub-units that concurrently tackle different elements (or, sometimes, alternative approaches to a single element) of the task (Takeuchi & Nonaka, 1986). The managers leading the team must foster an atmosphere that encourages open information sharing and debate. They are also responsible for conveying progress and results to top management.

This model places middle managers in the primary position of converting raw information and technology developed by employees into new product and business concepts that meet the goals enunciated by top management (Nonaka, 1991). Nevertheless, it is the employees working on the middle manager’s team who are the ‘most important knowledge creating individuals’ in this approach (Nonaka, 1994, p. 32).

Nonaka considers this management approach to be particularly vital in times of crisis. While search must be enabled in many directions in order to consider as many options as possible, it is up to managers to ‘orient this chaos toward purposeful knowledge creation’ (Nonaka, 1991, p. 103). The ability to handle crises creatively rather than destructively must be built into the company’s structure and routines (Nonaka, 1994, p. 28). This ability to channel crises into new opportunities is a key dynamic capability of an enterprise (Teece, Pisano, & Shuen, 1990, 1997).

In Nonaka’s view, the necessary flexibility is ensured by information ‘redundancy’ (Nonaka, 1994, p. 29). The more that information about the knowledge of employees is widely available, the more likely that an employee will find a new combination that can address a challenge. This is where database-driven approaches to knowledge management fit into Nonaka’s framework, and he provides a clear example when discussing the use of information technology at Seven-Eleven Japan (Nonaka & Toyama, 2007, p. 390). Information overload at the individual level is avoided by limiting the number of employees with whom any single employee interacts (Nonaka, 1994, p. 29).

Although this approach may not be valid in all contexts, it provides an apt description and normative framework for how the enterprise can exploit new opportunities and transform itself in response to challenges. In that sense, it is also a useful elaboration of how a large organization can build and maintain dynamic capabilities.

Nonaka’s middle managers are far from the useless drones that we often caricature in the management literature. Moreover, they haven’t been made obsolete by information technology and movements to empower front-line employees. Indeed, information technology allows middle managers to command more information and data in executing their role of guiding the active collaboration and healthy conflict of the company’s knowledge-creating workers.

Conclusion

Nonaka’s conception of the knowledge-creating firm and the SECI process is firmly rooted in his deep knowledge of the experience of Japanese firms. The emphasis is very much on group creativity and consensus-based decision making. This raises the question of whether the SECI process is fully transferable to US and European contexts.

The stagnation of Japan’s economy over the past two decades has shifted the world’s focus from the value creation ability of Japan’s major firms to their relatively poor record of transformation. In this context, it is important to note that Japan’s value creation record remains strong. According to the annual list of top US patent assignees compiled by IFI CLAIMS® Patent Services for 2011, Japanese companies held six of the top ten places and 19 of the top 50 (IFI CLAIMS, 2012).

Nevertheless, from a strategic management perspective, it is fair to note that companies do not live by knowledge creation alone. To serve as a basis for competitive advantage, Nonaka’s knowledge creation framework must be married to good strategy and strong dynamic capabilities. Knowledge creation without a suitable strategy, timely resource re-allocation, and a viable business model is of little value.

Nonaka implies the presence of good strategy by referring to the vision of top management and the development of new business concepts by middle managers, but the strategic side of his theory is underdeveloped. A vision is not a strategy. Nonaka and Toyama (2007) specifically address strategic management, but their framework of ‘phronesis‘ (which involves, among other things, subjective judgments about what constitutes a ‘good’ solution in a given context) still largely revolves around the management of ‘knowledge’ within the organization. The key elements of strategy, such as diagnosis, guiding policy and coherent action (Rumelt, 2011), are not emphasized.

I am in agreement with Nonaka that it is foolish to search for a general theory of management rather than a framework that relies in part on intuition skilfully applied in each context (Nonaka & Toyama, 2007, p. 373). However, that does not eliminate the need for an analytic understanding of strategic variables such as network effects, entry timing, the role of industry architecture, complementarities, coherence, and cospecialization – all of which are important for capturing value from new products (Teece, 1986, 2006).

One attribute of Nonaka’s work is that it has a deep philosophical bent, which makes it hard in some cases to operationalize. At the same time, this philosophical patina helps us better appreciate that management is not just about the numbers. Much of what Nonaka has written, based on his own observations about the benefits of healthy conflict within teams, has been substantiated by empirical studies (for example, Dooley & Fryxell, 1999; see Nemeth, 2012, for an overview).

Nonaka’s achievements are man...

Indice dei contenuti

• Cover
• Title
• Scholarship with Wisdom: An Introduction
• Part I
• Part II
• Part III
• Index