Knowledge Creation Theory: Past, Present, and Beyond

Knowledge Creating Theory: Past, Knowledge Creating Theory: Past, Present, and BeyondPresent, and Beyond

Der Chao ChenDer Chao Chen

Graduate School of Knowledge ScienceGraduate School of Knowledge Science

Japan Advanced Institute of Science and TechnologyJapan Advanced Institute of Science and Technology

20072007

OutlineOutline

►BackgroundBackground►Emergence of knowledge creating Emergence of knowledge creating

theorytheory►SECI ModelSECI Model►Knowledge spiralKnowledge spiral► Leading the knowledge creating processLeading the knowledge creating process

►Knowledge assets►The Firm as an dialectic entityThe Firm as an dialectic entity►Strategy-as-distributed phronesisStrategy-as-distributed phronesis►DiscussionsDiscussions

BackgroundBackground

►Knowledge becomes one of production Knowledge becomes one of production endowments in today’s economic endowments in today’s economic development.development.

►Reengineering, downsizing cannot improve Reengineering, downsizing cannot improve competitiveness of Western countries.competitiveness of Western countries.

►Prosperity of Japan economy before the Prosperity of Japan economy before the “lost decade” (1991-2000) attracted people “lost decade” (1991-2000) attracted people to find out the success secret of its growth.to find out the success secret of its growth.

Emergence of knowledge creating Emergence of knowledge creating theorytheory

►Back to 1986, new product development Back to 1986, new product development models derived from Japanese companiemodels derived from Japanese companies (Takeuchi & Nonaka, 1986).s (Takeuchi & Nonaka, 1986).

►Middle-up-down management model was Middle-up-down management model was proposed (Nonaka, 1988) to emphasize thproposed (Nonaka, 1988) to emphasize the role of middle managers in the organizate role of middle managers in the organization.ion.

Emergence of knowledge creating Emergence of knowledge creating theorytheory

► All begins from Organizational knowledge All begins from Organizational knowledge creation process.creation process.

Source: Nonaka (1994).

Emergence of knowledge creating Emergence of knowledge creating theorytheory

► PhilosophyPhilosophyWestern: tacit /explicit knowledge (Polanyi), episteWestern: tacit /explicit knowledge (Polanyi), episte

mology (how to know), ontology (what one existmology (how to know), ontology (what one exists for), etc.s for), etc.

Japan: Ba (Nishida), oneness of humanity and natJapan: Ba (Nishida), oneness of humanity and nature, oneness of body and mind, and oneness of sure, oneness of body and mind, and oneness of self and other.elf and other.

► Organization theory Organization theory Information processing perspective,Information processing perspective,Organizational communication and coordination, Organizational communication and coordination,

and and Leadership.Leadership.

SECI ModelSECI Model

►SocializationSocialization

►ExternalizationExternalization

►CombinationCombination

► InternalizationInternalization

SECI ModelSECI Model

Source: Nonaka & Toyama (2003); colorized in Nonaka (2004)

Knowledge spiralKnowledge spiral

► Knowledge spiral runs within and Knowledge spiral runs within and beyond the organizational boundary.beyond the organizational boundary.

Source: Nonaka, Toyama & Konno (2000).

Leading the knowledge creating Leading the knowledge creating processprocess

►Where is the Where is the birthplacebirthplace of knowledge? of knowledge?

Source: Nonaka, Toyama & Konno (2000).

Leading the knowledge creating Leading the knowledge creating processprocess

►Ba: a shared context in motion; the context and tBa: a shared context in motion; the context and the meanings that are shared and created through ihe meanings that are shared and created through interactions that occurs at a particular time and spnteractions that occurs at a particular time and spaceace

Source: Nonaka, Toyama & Konno (2000).

Leading the knowledge creating Leading the knowledge creating processprocess

►SECI model + Knowledge spiral + BaSECI model + Knowledge spiral + Ba

Source: Nonaka, Toyama & Konno (2000).

Leading the knowledge creating Leading the knowledge creating processprocess

Source: Nonaka, Toyama & Konno (2000).

Leading the knowledge creating Leading the knowledge creating processprocess

► Different knowledge assets in respective eDifferent knowledge assets in respective elements lements

Source: Nonaka, Toyama & Konno (2000).

The Firm as an dialectic entity.The Firm as an dialectic entity.

Source: Nonaka & Toyama (2002); colorized in Nonaka (2004)

The theory of knowledge-creating The theory of knowledge-creating firmfirm

►Subjectivity: tacit knowledgeSubjectivity: tacit knowledge

►Objective: explicit knowledgeObjective: explicit knowledge

►Synthesis: achieved through dialectical Synthesis: achieved through dialectical thinking and action. thinking and action.

Strategy-as-distributed phronesisStrategy-as-distributed phronesis

►Phronesis as Phronesis as ““experiential knowledge experiential knowledge to make context-specific decisions to make context-specific decisions based on one’s value and ethics (high based on one’s value and ethics (high quality tacit knowledge)” quality tacit knowledge)”

►The role of top executives/ founders.The role of top executives/ founders.

►The [XX] way, e.g. IBM, HP, Toyota, The [XX] way, e.g. IBM, HP, Toyota, Honda, Canon, etc.Honda, Canon, etc.

DiscussionsDiscussions

Level of Managerial HierarchyLow High

Middle Managers

Top Management

First line employees

High

Tacitness of

Knowledge

Low

DiscussionsDiscussions

Level of Managerial HierarchyLow High

High

Tacitness of

Knowledge

Low

Middle-up-down management

Strategy-as-distributed phronesis

Strategy as Practices(?)

DiscussionsDiscussions

►The role of top level executive The role of top level executive leadership has emphasized and leadership has emphasized and expanded in the development of expanded in the development of knowledge creating theory. knowledge creating theory.

►While While strategy-as-practice approachstrategy-as-practice approach is is a new emerging agenda, the role of a new emerging agenda, the role of first line employees and how they work first line employees and how they work to create, share, and transfer to create, share, and transfer knowledge/routines would be an new knowledge/routines would be an new direction. direction.

DiscussionsDiscussions

►Knowledge creating theory is an Knowledge creating theory is an knowledge based theory that…knowledge based theory that…

Combine philosophic arguments in the Combine philosophic arguments in the business context and knowledge in the business context and knowledge in the field of managerial and organizational field of managerial and organizational studies, supported by cases of studies, supported by cases of Japanese firms.Japanese firms.

DiscussionsDiscussions

►Chronological progress of knowledge creating theoChronological progress of knowledge creating theory vs. current management inquiriesry vs. current management inquiries

The knowledge creating firm (Nonaka & Takeuchi, 1995).

Why do firms differ?(Nonaka, 2006; Nonaka & Toyama, 2005)

1980’s 20061995

Why do firms differ?

(Nelson, 1991)

The new new product development game(Takeuchi & Nonaka, 1986)

Competitive advantages/Strategies(Porter, 1980, 1985)

Core competence(Prahalad & Hamel, 1990)

1986

DiscussionsDiscussions

►Back to the basic-Back to the basic-Why do firms differ?Why do firms differ?

►How to differentiate your firm from How to differentiate your firm from competitors and lead the competitive competitors and lead the competitive pace?pace?

►To industry community, how to learn from To industry community, how to learn from the field for creating knowledge is more the field for creating knowledge is more critical than developing philosophical, critical than developing philosophical, abstract dialogue and arguments.abstract dialogue and arguments.

DiscussionsDiscussions► Questions industry community may interest, sucQuestions industry community may interest, suc

h as h as

Could organizational knowledge be well identified,Could organizational knowledge be well identified, developed, and maintained in different context developed, and maintained in different contexts, such as in the different level of hierarchy, SME, s, such as in the different level of hierarchy, SME, and different industries?and different industries?

How to transfer organizational knowledge into reaHow to transfer organizational knowledge into real profit?l profit?

How to establish or identify of phronesis in start uHow to establish or identify of phronesis in start ups or SMEs?ps or SMEs?

Thanks for Your Time and Thanks for Your Time and CommentsComments

Der Chao Chenderchao.chen@gmail.com

® All rights of cited figures and tables belong to their original owners