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The Knowledge-Creating Company

How Japanese Companies Create the Dynamics of Innovation
Narrated by: William Michael Redman
Length: 11 hrs and 14 mins
5 out of 5 stars (1 rating)

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Publisher's Summary

How have Japanese companies become world leaders in the automotive and electronics industries, among others? What is the secret of their success? Two leading Japanese business experts, Ikujiro Nonaka and Hirotaka Takeuchi, are the first to tie the success of Japanese companies to their ability to create new knowledge and use it to produce successful products and technologies.

In The Knowledge-Creating Company, Nonaka and Takeuchi provide an inside look at how Japanese companies go about creating this new knowledge organizationally.

The authors point out that there are two types of knowledge: explicit knowledge, contained in manuals and procedures, and tacit knowledge, learned only by experience, and communicated only indirectly, through metaphor and analogy. U.S. managers focus on explicit knowledge. The Japanese, on the other hand, focus on tacit knowledge. And this, the authors argue, is the key to their success - the Japanese have learned how to transform tacit into explicit knowledge.

To explain how this is done - and illuminate Japanese business practices as they do so - the authors range from Greek philosophy to Zen Buddhism, from classical economists to modern management gurus, illustrating the theory of organizational knowledge creation with case studies drawn from such firms as Honda, Canon, Matsushita, NEC, Nissan, 3M, GE, and even the U.S. Marines. For instance, using Matsushita's development of the Home Bakery (the world's first fully automated bread-baking machine for home use), they show how tacit knowledge can be converted to explicit knowledge: when the designers couldn't perfect the dough kneading mechanism, a software programmer apprenticed herself with the master baker at Osaka International Hotel, gained a tacit understanding of kneading, and then conveyed this information to the engineers.

In addition, the authors show that, to create knowledge, the best management style is neither top-down nor bottom-up, but rather what they call "middle-up-down," in which the middle managers form a bridge between the ideals of top management and the chaotic realities of the frontline.

As we make the turn into the 21st century, a new society is emerging. Peter Drucker calls it the "knowledge society," one that is drastically different from the "industrial society," and one in which acquiring and applying knowledge will become key competitive factors. Nonaka and Takeuchi go a step further, arguing that creating knowledge will become the key to sustaining a competitive advantage in the future.Because the competitive environment and customer preferences changes constantly, knowledge perishes quickly.

With The Knowledge-Creating Company, managers have at their fingertips years of insight from Japanese firms that reveal how to create knowledge continuously, and how to exploit it to make successful new products, services, and systems.

©1995 Oxford University Press, Inc. (P)2014 Audible Inc.

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A well-researched classic

Knowledge management in knowledge industry is a much abused term. It isn't well understood by leaders in a very structured and actionable manner, though team members in the trenches have a fairly good gut feel of it, especially how tacit knowledge gets shared and internalized at an individual level (the fact that process police from ISO, CMMI and Six Sigma so naively and totally disregarded this fact in the context of knowledge industry must be held as a key learning lesson for the future generations). However, all these are highly abstract terms, and an absence of a comprehensive framework rigorously supposed by real-life data is sorely missing. Nonaka and Takeuchi's work is not only a pioneering one, but also a classic for the knowledge era, for their work allows us to elicit key learnings how knowledge gets created, shared, consolidated and baselined in different context.

Even though the book was written over twenty years back, and essentially captures the examples from Japanese companies predominantly in electronics and manufacturing, I can very easily see them applied to knowledge-intensive and creative endeavors such as software development. In software development, we have historically relied on documentation as a means to capture and communicate the knowledge, hardly realizing that most of the associated knowledge continues to reside in the heads of the software developers, and can simply never be documented! Agile movement recognized it and built conceptual models that piggyback on it, but most so-called agile coaches have neither read this book nor been in a situation where they are creating knowledge such as examples from the book to really give them a deep and grounded understanding of how knowledge gets created inside a company. This is a great and mandatory read for anyone involved in any form of leadership role, or involved with how knowledge creation.