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The Wise Leader PresentationIkujiro Nonaka

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  • The Wise Leader -Communitarian Theory of Sustainable Innovation

    Ikujiro Nonaka Professor Emeritus, Hitotsubashi University

    Xerox Distinguished Faculty Scholar, UC Berkeley

    The First Distinguished Drucker Scholar,

    Claremont Graduate University

    Chairman, Economic Research Center, FRI

    August 30, 2012

    1 Copyright. Nonaka, I. 2012

  • Knowledge-based View

    of Strategic Leadership

    2 Copyright. Nonaka, I. 2012

  • Drucker: We Need Innovation, and We Need a New Theory

    Knowledge is the only meaningful resource today.

    How knowledge behaves as an economic resource, we do not yet fully understand []

    We need an economic theory that puts knowledge into the center of the wealth-producing process. It alone can

    explain innovation. P. F. Drucker. (1993) Post Capitalist Society p.183

    (1993)

    P.F. Drucker

    3 Copyright. Nonaka, I. 2012

  • Schumpeters Innovation The Theory of Economic Development (1912)

    Creative Destruction: Innovation is merely the destruction of an equilibrium. No dynamic equilibrium exists and innovation is essentially a

    disturbance of the existing static equilibrium.

    New Combinations: Innovation is a commercial or industrial application of something new. A new product, process, or method of production; a new market or

    source of supply; new form of commercial, business, or financial organization.

    Mutation: Innovation incessantly revolutionizes the economic structure from within. An essential feature of innovation that it is something that is

    carried into practice.

    4 Copyright. Nonaka, I. 2012

  • Knowledge Needs to be Discovered H.A. Hayek

    Importance of context-specific knowledge there is beyond question a body of very important but unorganized knowledge which cannot possibly be called

    scientific in the sense of knowledge of general rules: the

    knowledge of the particular circumstances of time and

    space (p.214). SourceHayek, F.A. Use of Knowledge in Society. In C.Nishiyama and K.R. Leube (Eds.). The Essence of Hayek. Stanford, CA: Hoover Press.

    Competition as a discovery procedure Economist usually ascribe the order which competition

    produces as equilibrium a somewhat unfortunate term, because such an equilibrium presupposes that the facts

    have already all been discovered and competition therefore

    has ceased (p.259). Heyek. F.A. (1978). Competition as a discovery procedure. In The essence of Hayek. C.Nishiyama, K.R. Leube (Eds.). The Essence of Hayek.

    Stanford, CA: Hoover Press. 5 Copyright. Nonaka, I. 2012

  • Process Philosophy of Whitehead

    Process is Reality There is no such thing as substance. World is made up of occasions, particular and

    concrete events.

    Events flows in relationship with other various events.

    Substance is the state of a noun, cut from the continuum of events in the state of a verb.

    Process towards creativity It is the becoming rather than being. Present is a state which stand on the past and

    is opened to the future.

    6 Copyright. Nonaka, I. 2012

  • Propositions of The Knowledge-Creating

    Company and Managing Flow

    A firm is a knowledge

    creating entity (1995).

    A firm is a relentless process of converting knowledge to wisdom (2008)

    7

    A firm is a prudent

    community for sustainable

    innovation (2012)

    7 Copyright. Nonaka, I. 2012

  • Strategy is About Creating the Future

    The most significant characteristics of knowledge is that Knowledge is created by people in their interactions with each other and the environment.

    Knowledge is: Innovation itself is a knowledge creating process. Strategy is an intelligent capability to interpret the current situation and continuously create future in the social context.

    A dynamic social process of justifying personal belief towards the truth.

    8 Copyright. Nonaka, I. 2012

  • Net work with

    Partner

    (re-source)

    9

    Net work with

    Community

    (customer)

    Cost Profit

    Knowledge creation (SECI)

    Ba-plattforming

    Value Proposition

    Pursuance for Common Good

    Market Value

    Leading Business Creating Model

    of Sustainable Innovation

    Vision -Common Good

    Existential

    Institutional

    Organizational

    Financial

  • Value Proposition

  • An Organization has to Offer a Unique Value - Apple

    Not a thing (mono), but an event (koto)

    Not iPod, but multimedia experience (easy to

    download, easy to manage, easy to carry, can

    listen, view, and take video/photo)

    11 Copyright. Nonaka, I. 2012

  • Business Model of iPod

    Hardware Software

    Development

    e-Commerce

    Copyright Management of Multimedia

    Contents

    Contents

    Production

    Hardware

    Production

    ProductSoftware Design

    Brand

    Management

    Hardware

    Sales

    Contents

    Delivery

    Cost

    Structure

    iPod

    Multimedia

    Download

    Lifestyle

    Brand

    Apple Store

    Dealer

    Network

    iTunes

    Revenues

    from

    Hardware Revenues

    from Multimedia

    High-end

    Customer

    Organization

    al Base Offering Customer

    Profit

    Source: De Kluyver, C.A. (2009)

    Music

    Anywhere

    12 Copyright. Nonaka, I. 2012

  • Event (Koto) starts from changing noun to verb.

    One phenomenon appears out of combining multiple factors. See the phenomena not by itself, but see as XX-zation, a process to become XX. Search for a subject that caused XX.

    Commodity (Mono) is one form of a social relationship.

    Marx perceived a commodity as not a visible thing but a social relationship between capitalists exploiting workers. By so doing, he captured reality as not a fixed object but as an active subject.

    Capital is not a thing but a process in which money

    is perpetually sent in search of more money.

    Methodology for Transforming

    a Thing (Mono) to an Event (Koto)

    Source: Based on Maki, Y. (2003). Kiryu no naru oto (Sound of air current). Tokyo, Chikuma Gakugei Bunko.

    13 Copyright. Nonaka, I. 2012

    Source: Based on Kariya, T. (1996). Fukuganteki shikouhou (Think multifaceted ). Tokyo, Koudansha.

    Source: Harvey,D.(2010 The Enigma of Capital and the Crisis of Capitalism,Oxford,P.40

  • SECI Model

    14 Copyright. Nonaka, I. 2012

  • Plato (left) & Aristotle (right) School of Athens: Raphael

    15 Copyright. Nonaka, I. 2012

  • Copyright Nonaka, I. 2011

    Attention to Practical Wisdom is Increasing

    Synthesis of Idealism and Pragmatism

    Practical Wisdom, a contradiction? Plato: Wisdom is theoretical, abstract and for the few

    elites; it has nothing to do with practice.

    Truth is, only practical wisdom can solve daily issues.

    Source: Schwartz, B. & Sharpe, K. (2010). Practical Wisdom. New York: NY. Riverhead Books.

    Aristotle: Wisdom is to make judgment in everyday life with deliberation and emotion,

    and take the right action. Wisdom is

    embedded in practice.

    (2010)

    16

  • Why Tacit Knowledge?

    We can know more than we can tell.

    All knowledge is either tacit or rooted in tacit knowledge. M. Polanyi

    Unless you believe, you will not understand. St. Augustine

    Belief precedes knowing. To free ourselves from the prejudice of considering

    only objective, scientific, and explicit knowledge as

    the knowledge, we need to restore the perspective

    on knowledge which will balance belief and rational,

    and art and science, by admitting that knowing requires the commitment of the individual.

    Copyright 2012 Nonaka, I. 17 17 Copyright. Nonaka, I. 2012

  • Two Dimensions of Knowledge

    Spiral up through dynamic interaction

    Analog-Digital Synthesis

    Objective and rational knowledge that can be expressed in words, sentences, numbers, or formulas (context-free)

    Theoretical approach Problem-solving Manuals Database

    Subjective and experiential

    knowledge that can not

    be expressed in words,

    sentences, numbers, or

    formulas (context-specific)

    Cognitive Skills beliefs

    images

    perspectives

    mental models

    Technical Skills craft, know-how

    Tacit Knowledge Explicit Knowledge

    Copyright 2012 Nonaka, I. 18 18 Copyright. Nonaka, I. 2012

  • Organizational Knowledge Creation Process SECI Model

    Sharing and creating tacit knowledge through direct experience (Empathizing)

    I = Individual, G = Group, O = Organization, E = Environment

    Learning and acquiring new tacit knowledge in practice (Practicing)

    1. Perceiving reality as it is from activities 2. Empathizing,

    resonating, recognizing and foreseeing

    3. Transferring tacit knowledge

    9. Embodying explicit knowledge through experimenting, hypothesis testing and reflection

    10. Contemplation in action

    Articulating tacit knowledge through dialogue and reflection (Conceptualizing)

    4. Articulating tacit knowledge using symbolic language 5. Translating tacit knowledge into a concept or prototype

    Systemizing and applying explicit knowledge and information (Modeling)

    6. Creating relationship and hypothesis among concepts; modeling, prototyping

    7. Communicating and sharing explicit knowledge

    8. Editing and systemizing explicit knowledge

    Ex

    plic

    it

    Explicit

    Ta

    cit

    E

    xp

    licit

    Explicit

    Ta

    cit

    Socialization Externalization

    Internalization Combination

    O G

    E

    I

    Environment

    Individual

    I G

    G

    G

    G

    Org.

    E

    I

    I

    I

    I

    I

    Group

    I E O

    Nonaka I., H. Takeuchi & N. Konno Copyright 2012 Nonaka, I. 19

  • Innovation as SECI Spiral

    Empathize with reality through actual experience (Socialization), condense the essence of awareness into concepts (Externalization), relate the concepts and systemize (Combination), create value in the form of technology, products, software, services and experiences, and embody the knowledge (Internalization) and, at the same time, stimulate the emergence of new knowledge in the organization, market and environment, and spiral up to the Socialization step. Through continuous and fast spinning of the SECI spiral, a firm can build its synthesizing capability of knowledge to pursue both creativity and efficiency.

    Copyright Nonaka, I. 2012 20 20 Copyright. Nonaka, I. 2012

  • Ba -Platforming for Knowledge Emergence-

    21 Copyright. Nonaka, I. 2012

  • Knowledge is Created in Ba Shared Context in Motion

    Intersubjectivity

    BaPlatforming

    Co-Creating Meaning

    Open Close Open Close

    Individual contexts are shared at here now context of Ba. Shared context becomes the base of emerging knowledge. Intersubjectivity is established when people accept others as a whole being, resonate and empathize with others, then it becomes our subjectivity.

    22 Copyright Nonaka, I. 2012 22 Copyright. Nonaka, I. 2012

  • Humans Create Meaning in Ba Essence of Analog Thinking

    Analytic Thinking Break the whole into parts; when a part is affected, partial action can be taken.

    Holistic Thinking The whole is unified and coordinated by fluctuations and functions of the parts.

    Meaning resides in the whole: Digital thinking diminishes the meaning.

    The Power of Tacit Knowing

    When on a bicycle, we can instantly synthesize the handlebars, force on the pedals, angle of the body and the bicycle, response of the muscle, and the view in front.

    23 Copyright Nonaka, I. (2012) 23 Copyright. Nonaka, I. 2012

  • Tacit Knowing: From Particular to Comprehensive Entity

    Michael Polanyi

    The Parthenon

    Greek Culture Greek Philosophy

    Anti-Government Demonstration

    Greece in EU

    Crocus at the Parthenon

    A process of changing perspective from the lower particular to the upper whole. A whole can become the part. A whole is determined by the purpose.

    Greek Crisis

    Copyright 2012 Nonaka, I. 24 24 Copyright. Nonaka, I. 2012

  • Ba Promotes Socialization Through Physical and Mental Touching

    Interpenetration of the body senses: Intercorporeality (Merleau-Ponty)

    Embodied Mind (Francisco Valera) Socialization occurs in the brain by

    copying the actions of others:

    discovery of the mirror-neurons. Through mirror neurons, we can understand the intentions of othersThe interdependence between self and other that mirror neurons allow shapes the social interactions between people, where the concrete encounter between self and other becomes the shared existential meaning that connects deeply. (Iacoboni, et al:2005, Rizzolatti:2005)

    25 Copyright Nonaka, I. 2012 25 Copyright. Nonaka, I. 2012

  • Boundary Object Ba for Connecting Ba

    A boundary object is a symbol, metaphor, concept, organization,

    system, culture, and ICT, that resides in the boundary of different

    communities or systems; it is an object that connects

    communities by creating a new community.

    community

    community community

    community

    community community

    Boundary Object

    Source: Nonaka, I. and Konno, N. (Forthcoming). Kenryo no keiei (Prudence-based Management)

    Copyright Nonaka, I. 2012 26 26 Copyright. Nonaka, I. 2012

  • Copyright Nonaka, I. 2012

    Knowledge Ecosystem Organic Configuration of Ba

    Customer

    Firms

    Government

    Supplier Firms

    Competitor

    Firm

    Universities

    Community

    Ba

    Ba

    Ba

    Knowledge is created in relationships. Knowledge ecosystem dynamically interacts and evolves the relationships between the stakeholders in the multi-layers of ba; stakeholders compete, collaborate and transcend the organizational boundaries.

    27 27 Copyright. Nonaka, I. 2012

  • Phronetic Leadership

    -Prudence /Practical Wisdom-

    28 Copyright. Nonaka, I. 2012

  • Wise Leader See Through the Context and Realize the Value

    Copyright Nonaka, I. 2012

    Source:

    Nonaka, I., & Takeuchi, H. (2011). The Wise Leader, Harvard Business Review, May, 2011

    Nonaka, I., & Takeuchi, H. (2011). Kenryo no Leader [Wise Leader]. Diamond Harvard Business

    Review, Sep, 2011

    Nonaka, I., & Konno, N., (2007). Bitoku no Keiei [Virtue-based Management]. NTT Shuppan.

    29 Copyright. Nonaka, I. 2012

  • Phronesis by Aristotle Prudence, Practical Wisdom

    Phronesis is practical wisdom for exercising

    the best judgment for the common good in a

    particular context.

    Ability to find the right response in a particular context

    Ability to synthesize the particular and universal, contemplated rationale and

    improvisation on the spot

    Contemplation in action

    Contextual judgment and timely balancing

    Copyright Nonaka, I. 2012 30 30 Copyright. Nonaka, I. 2012

  • Six Abilities of Phronesis

    Phronesis is a virtuous habit of making judgments

    and taking actions that serve the common good.

    1. Ability to make

    judgment on goodness.

    2. Ability to

    create ba.

    3. Ability to see the

    reality as it is. 4. Ability to articulate

    the essence.

    5. Ability to exercise

    political power.

    6. Ability to foster

    phronesis in others.

    Source: Nonaka & Takeuchi, HBR May 2011

    31 Copyright. Nonaka, I. 2012

  • Phronetic Leaders: Soichiro Honda, Steve Jobs, and Konosuke Matsushita

    Soichiro Honda (1906-1991) Founder of Honda Motor Corporation

    Steve Jobs (1955-2011) Co-founder of Apple Computer

    32 Copyright. Nonaka, I. 2012

  • Phronetic Leadership

    1. Ability to make a judgment on goodness

    Every sort of expert knowledge and every inquiry, and similarly every action and undertaking, seems to seek some good.

    Aristotle, Nicomachean Ethics

    Example: Self-sufficient values such as happiness and self-actualization.

    Internal Good: Realized in the course of trying to achieve those standards of excellence (artisanship).

    MacIntyre

    33 Copyright. Nonaka, I. 2012

  • Humans are Purposeful Beings

    Optimal results are claimed to be attainable only

    by trying for too much by reaching beyond the limits of the possible. Humans are living the

    worlds of the reality and the possibility.

    (Rescher, 1990)

    Ideal can never be achieved, but because we

    challenge to achieve, we can go beyond our

    limits, that is the source of creativity. What

    motivate us is the wish and will for the ideal.

    Rescher, N. (1990). Human interests: Reflections on philosophical anthropology. Stanford University Press, Palo Alto: CA.

    34 Copyright. Nonaka, I. 2012

  • Technology Married with Liberal Arts

    and Humanity: Steve Jobs

    Apples DNA: Technology alone is not enough. Its technology married with the

    liberal arts, married with the

    humanities, that yields the

    results that makes our

    hearts sing.

    Steve Jobs, Apple

    35 Copyright. Nonaka, I. 2012

  • Need for a Good Theory:

    Soichiro Honda Respect for Sound Theory:

    Action without philosophy is a lethal weapon; philosophy without action is meaningless.

    Just to be hard working has no value. The good theory is the necessary premise for working hard.

    Joy of buying determines the value of the product in a most fair way. The person who knows the value of the

    product and gives final evaluation is not the

    manufacturer or the dealer, but the buyer who will be

    using the product in daily basis []

    Source Honda Top Talks Passing down the basics

    36 Copyright. Nonaka, I. 2012

  • Phronetic Leadership

    2. Ability to create ba

    Imaginative capacity to understand and

    empathize with others through daily verbal

    and nonverbal communication, to read the

    situation to judge the best timing for

    interaction, and to elicit empathy in return.

    37 Copyright. Nonaka, I. 2012

  • Joking is Difficult

    Soichiro Honda

    Joking is very difficult. You have to grasp the atmosphere of the occasion and the

    opportunity. It exists only for that particular

    moment, and not anywhere else. The joke is

    in the timing and it doesnt work at any other moment ... to joke is to understand human

    emotion.

    Soichiro Honda

    38 Copyright. Nonaka, I. 2012

  • Waigaya at Honda The company prepares the ba (good hotel, good food, good spa) away from the daily work environment.

    Day 1: Conflict between the individuals

    Start with bad mouthing the boss; frustrations and conflicts.

    Thorough discussions lead to conflicts but there is no escape.

    As time passes, superficial explicit knowledge runs out and individual

    barriers disappear.

    Day 2: Mutual understanding and acceptance

    Accept the differences; understand the beliefs of others.

    Accept the opinions of others.

    Day 3: Leap of the minds

    With constructive thinking, a leap of the minds and concepts happen.

    39 Copyright. Nonaka, I. 2012

  • Magnetic Pull

    Steve Jobs

    He uses your first name very often. He looks

    directly in your eyes with that laser-like

    stare. He has these movie-star eyes that are

    very hypnotic. But what really gets you is the

    way he talks theres something about the rhythm of his speech and the incredible

    enthusiasm he conveys for whatever it is

    hes talking about that is just infectious.

    Source: Gallo, C. (2009). The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience. McGraw-Hill Professional. P.28.

    40 Copyright. Nonaka, I. 2012

  • Phronetic Leadership

    3. Ability to see the reality as it is.

    The ability to recognize the constantly

    changing situation correctly, and quickly sense

    what lies behind phenomena to envision the

    future and decide on the action to be taken.

    God is in the details.

    41 Copyright. Nonaka, I. 2012

  • Grasp the Essence from the Actual Situations

    Picture: Honda Motors Corporation

    http://images.businessweek.com/ss/09/09/0929_jobs_presentations/index.htm

    Soichiro: Use all five senses

    to sharpen the common

    sense; it will strengthen the

    power of imagination and

    judgment.

  • Copyright. Nonaka, I. 2012 43

    Reality and Actuality

    Reality (Mono) Actuality (Koto)

    Substance: an existing object Action: a situation in progress.

    That could be observed. Can only be grasped by those

    Can be recognized and committed to and dwelling in

    Managed by logic. The actual, situated experience.

    with the five senses and

    through empathy with others.

    To convert mono term (e.g., noun) to koto term (e.g., verb), put apparent preconditions into bracket and directly sense actuality (epoch phenomenological suspension of judging reality).

  • Phronetic Leadership

    4. Ability to articulate the essence

    The ability to conceptualize and articulate

    subjective ideas in a clear language, link

    these micro concepts to a macro historical context, and convincingly articulate them

    as vision and story for the future.

    44 Copyright. Nonaka, I. 2012

  • Harmonize the Concepts in Ba /Make Full Use of Metaphor

    Source: Honda Motor Company

    http://images.businessweek.com/ss/09/09/0929_jobs_presentations/index.htm

    45 Copyright. Nonaka, I. 2012

  • Phronetic Leadership 5. Ability to exercise political power

    The ability to bring people together and

    spur them to action, combining and

    synthesizing everyones knowledge and efforts in pursuit of the goal, by choosing

    and utilizing the means and rhetoric (the art

    of effective or persuasive speaking or

    writing) suitable to each particular situation

    with shrewdness and determination.

    46 Copyright. Nonaka, I. 2012

  • Leadership to Exercise Political Power

    Soichiro Honda and Steve Jobs

    I address all employees! Let us bring together the full strength of Honda Motor Co. to win through to this glorious achievement. The future of Honda Motor Co. depends on this, and the burden rests on your shoulders. I want you to turn your surging enthusiasm to this task, endure every trial, and press through with all the minute demands of work and research, making this your own chosen path. The advances made by Honda Motor Co. are the growth you achieve as human beings, and your growth is what assures our Honda Motor Co. its future.

    Declaring participation in the Isle of Man Tourist Trophy Race

    Source Honda Top Talks Passing down the basics

    Reality Distortion Field The reality distortion field was a confounding mlange of a charismatic

    rhetorical style, and indomitable will, and an eagerness to bend any facts to fit

    the purpose at hand. In one line of argument failed to persuade, he would deftly

    switch to another. Sometimes, he would throw you off balance and suddenly

    adopting your own position as his own, without acknowledging that he ever

    thought differently.

    Source: Karney, L. (2008). Inside Steves Brain (expanded edition). pp.162-163

    47 47 Copyright. Nonaka, I. 2012

  • Phronetic Leadership

    6. Ability to foster phronesis in others

    The ability to create a system of distributed

    phronesis by fostering and transferring the

    existing phronetic capabilities of individuals

    to others to build a resilient organization

    which can respond flexibly and creatively to

    any situation to pursue its own good.

    48 Copyright. Nonaka, I. 2012

  • Provide Phronetic Examples (Apprenticeship)

    Practical Wisdom = Classroom Instruction (most MBAs)PracticeFeedback & Self-Correction

    Charan, R. (2008). Leaders at All Levels.

    Leadership can only be developed through

    practice.

    Growth is accelerated by challenging, complex jobs and

    by timely and detailed

    evaluation and self-reflection

    Can expect giant leaps in learning

    Progression

    Time

    A B C

    49 Copyright. Nonaka, I. 2012

  • Practice as Kata

    Kata (form) : Way of doing things, core of the ideal action.

    Good Kata functions as archetype that

    fosters creative routine but provides higher

    freedom.

    Shu (learn), Ha (break), and Ri (create) steps are critical in continuous self-

    renewal processes.

    50 Copyright. Nonaka, I. 2012

  • Creative Routines

    3-Gism: Be at the actual place of work (genba), know the actual product (genbutsu) and situation (genjyou), be realistic (genjitsuteki).

    Respect sound theory, develop fresh ideas and make the most effective use of them.

    A00 -What do you do this for? (Ontological)

    A0 - What is your concept? (Conceptual)

    A - What is your specification? (Operational)

    Apple Honda

    Simplify. Strip back, and focus. Say no

    When it comes to idea, everything is game. Willing to try new things

    Dont compromise. Hash it out, get way down in the details. Seek out the highest quality

    Include everyone. Work people hard. Embrace the team

    Engage in intellectual combat. Argument and debate foster creative thinking

    Find a passion in your work. Insist on the seemingly impossible. Motives make a difference.

    Source: Karney, L. (2008/2009). Inside Steves Brain (expanded edition). Portfolio, New York.

    51 Copyright. Nonaka, I. 2012

  • System to Distribute Leadership LPL and PL to nurture Honda DNA

    LPL In charge of development

    Engineering

    PL Test PL Design PL

    Engine

    Body

    Suspension

    Rigging

    etc

    Engine

    Wind-tunnel

    Crash

    Emission

    Durability

    etc

    Layout

    Exterior

    Interior

    Color

    Design data

    Design model

    etc Source: Honda Motor Company internal material

    Hondas exemplar is Soichiro Honda.

    Honda is not a company in which only top management plays an

    important part. Every one at the frontline is very important. Every

    worker should be Soichiro Honda. It is important for Honda to create

    many Soichiro Honda. -Takeo Fukui, CEO of Honda

    52 Copyright. Nonaka, I. 2012

  • Fractal Organization

    Business System Layer

    Knowledge Layer

    Project Team Layer

    Matrix and Fractal organization connects

    multiple ba.

    Matrix organization cannot convert

    knowledge effectively, because matrix tend

    to coordinate between project and

    business layers.

    Business and Project layers create and

    accumulate knowledge on their own way.

    Fractal organization flexibly combines

    various knowledge from each layer; can

    maximize the use of resources and energy

    in a limited time.

    Project team reports directly to top

    management; reduces the organizational

    hierarchy, communication will be

    condensed, dialogue will be deepened,

    and promote middle-up-down spiral.

    The key of Knowledge Layer is the

    boundary object that stimulates the conversion of knowledge; symbol, concept,

    system, culture, ICT, etc.

    Fractal Organization

    Source: Inoue, A. (2012). Game-fication NHK Publishing.

    Source: Kikuzawa and Nonaka, (2012). Chishiki base kigyou no kouritsu soshiki design

    Knowledge Ecosystem

    53 Copyright. Nonaka, I. 2012

  • DAIHATSU: Mira e:S Polish up the Ecology Power of the Small Cars with Existing Technologies

    Facing headwind, but changed to tailwind: Lehman shock and Prius shock In 2009, concept car was presented at the Tokyo Motor Show. But due to

    the sudden increase of oil price and the launch of hybrid cars, expectation

    for small cars changed drastically.

    Keep the target launch timing at 2011 as scheduled, but redo everything from the product planning phase. Changed the concept e:S from energy saving to eco and Smart.

    2 innovations led to launch in 17 months Innovation in Organization: from partial to total optimization e:S

    optimization; set up a virtual company of 30 experts in planning,

    development, procurement, production, and sales. Innovation in Technology: realize 30km/l at JC08 mode, start from 7.95

    million yen. Reduced 60kg from Mira, reduced parts for 15%, while

    improving fuel efficiency for 40%.

    54 Copyright. Nonaka, I. 2012

  • Reset All the Existing Processes and Minds Questioned the Raison Dtre of a Small Car

    The 3rd category of Eco-car Small car needs to be fuel efficient, low price, and ecological

    Not extension of the past, but change the way of DAIHATSU

    Stop the matrix of vertical and horizontal organizations; transfer members to the project team, share objectives, and unite their actions

    Create a sense of surprise with TV ads

    http://gazoo.com/G-Blog/tampyou/488549/Article.aspx

    Bruce Willis

    55 Copyright. Nonaka, I. 2012

  • Innovation at Organization and Technology:

    Self-contained Virtual Company

    Transfer members to project teams Set the taskforce under the top management. Create, accumulate,

    and utilize knowledge.

    Members should not represent their home division (partial optimization), but act for the benefit of the project (total

    optimization) in a same vector.

    Chief Engineer is given personnel management authority; no place to go back, ticket with no return for the members.

    Make judgment on the spot based on the actual situation.

    Use new terms for new activities

    http://www.sankeibiz.jp/business/news/110926/bsa1109260501000-n2.htm

    http://wedge.ismedia.jp/articles/print/1653

    Chief Engineer: Toru Ueda

    Project Members

    Synchronized designing: set an agile scrum so that design, evaluation, and production collaborate

    from the early stage.

    Budget approach: not cost down approach, but realize maximum feature within the budget.

    Material oriented: back to the basics of design and maximize the quality of material for all the parts.

    56 Copyright. Nonaka, I. 2012

  • Agile Scrum Innovation Software Development is a Knowledge Creating Process

    Source: Sutherland, J. et al. Scrum: An extension pattern language for hyperproductive software development.

    Source: Takeuchi, H. & I. Nonaka. (1986). The new new product development, Harvard Business Review

    January-February, 1986.

    Agile scrum encourages team members to socialize, externalize, internalize and combine technical knowledge on an ongoing basis, thus allowing technical expertise to become community property for the community of practice [Nonaka 95].

    Scrum Meetings are therefore rituals with deep cultural transcendence. Meeting at the same place at the same time and with the same people, enhances a feeling of belonging, and creates the habit of sharing knowledge.

    1 2 3 4 5 6

    1 2 3 4 5 6

    1 2 3 4 5 6

    A

    (Relay)

    B

    (Sashimi)

    C

    (Scrum)

    Phase

    Phase

    Phase

    57 Copyright. Nonaka, I. 2012

  • Human Touch with IT Key Points of Scrum Development

    Pair Programming Two developers (roles of a driver and a navigator)

    share one PC

    Change roles every 5~10 minutes. Change pairs several times a day

    Task Kanban (Visualize the tasks) Way to manage ToDo, Doing, and Done.

    Everybody can start working on their task autonomously without any instruction

    Check every morning at the 15 minutes of Scrum Meeting

    Feedback (KPT:Keep/Problem/Try) In a casual atmosphere, everybody share their

    ideas on Keep, Problem, Try.

    Through the dialogue, socialize tacit knowledge and convert to explicit knowledge (externalize and combine)

    Source: Hiranabe, K. (2010). Agile development and scrum. Presentation material at Agile Japan 2010

    Keep

    Problem

    Try

    Solution

    Experiment,

    Worked

    Did not work

    New problem New Ideas

    58 Copyright. Nonaka, I. 2012

  • Middle-up-down Knowledge-Creation Process

    Solving

    contradiction

    Contradiction Cross-leveling

    of Knowledge Reality (What is)

    (Top)

    Mid-range theory

    (Middle)

    Grand Theory (What ought to be)

    (Front-line)

    Copyright Nonaka I. & H.Takeuchi 2010 59 Copyright. Nonaka, I. 2012

  • Distributed Idea Engine -Ciscos CEO John Chambers-

    From a top-down command-and-control company to teamwork and collaboration; connected

    communities of distributed leaders, a.k.a.

    Distributed Creative Engine.

    More than 70,000 employees participated in the intra-company SNS Create ones profile page with information on their expertise and

    business know-how. Search allows one to find new contacts.

    Remove barriers of divisions, counties, positions, etc. so that wisdom around world can instantly be shared (a ba that unifies the

    HR system, and enables the real-time communication)

    Nurture agile and proactive employees who exercise timely and just-right judgments.

    Source: McGirt, E. (2008). How Ciscos CEO John Chambers is turning the tech giant socialist. Fact Company.com. Retrieved April 8, 2011 from http://www.fastcompany.com/magazine/131/revolution-in-san-jose.html Source: Fryer, B. (2008). Cisco CEO John Chambers on Teamwork and Collaboration. Harvard Business Review blog. Retrieved April 12, 20011 from http://blogs.hbr.org/hbr/hbreditors/2008/10/cisco_ceo_john_chambers_on_tea.html 60 Copyright. Nonaka, I. 2012

  • Cisco Japan (Winner of Japan Management Quality Award)

    Organization for Continuous Innovation Middle manager who knows top management strategy

    as well as whats happening at the frontline An environment where all employees can share, empathize, and

    resonate with the vision and the culture, around the middle managers

    who are close to the frontline and who understand the management

    vision

    Hybrid Management with the sense of frontline Human resource system with ICT tools, Company wide strategy

    framework

    Soccer style organization where individuals can move dynamically An organization that makes timely judgment and balancing while

    utilizing the network of proactive individuals.

    From an ICT company to BT company From selling products to selling business model

  • Communitarian View of

    Management

    - Idealistic Pragmatism -

    62 Copyright. Nonaka, I. 2012

  • Basis of Phronesis

    Humanity/Liberal Arts Philosophy, History, Literature, Psychology, Art,

    * Anthropology, Biology, Design, Political Science, Urban

    Planning, Theology

    Peak and Diverse Experience Pure Experience (sense of awe), Shared-experience with

    the exemplar, Success/Failure experience, Cross-cultural

    experience

    Practice and Tradition Artisanship, Kata, High Standard of Excellence,

    Relentless Pursuit for Excellence

    63 Copyright. Nonaka, I. 2012

  • Justice or Good? Prioritizing 2 Views

    Libertarianism: People have basic rights of

    freedom of choice, provided the choices dont violate anyones rights.

    Justice before good: No value judgment on good; justice as logical, universal proposition applicable to all people.

    Source: Sandel, M. (2009). Justice: Whats the right thing to do? Farrar, Straus and Giroux

    Communitarianism:

    People born and live as a member of society; some freedom of choice is restricted

    Good before justice: Ask for way of life (value and purpose of good) of the particular context in the social relationship

    With the logical, universal and standardized Justice, we cannot judge according to the differences of particular situations.

    64 Copyright. Nonaka, I. 2012

  • In the pluralist societies with diversified religious, political and

    moral values, we must question ourselves the duties of the

    citizens and the common good of the society, that is, good life in a global viewpoint; by discussing in public and understanding mutually, we can establish respect and realize

    a fair society.

    Communitarian View

    Based on Sandel, M. (2009). Justice: Whats the right thing to do? Farrar, Straus and Giroux

    65 Copyright. Nonaka, I. 2012

  • A Knowledge-Creating

    Firm/Organization/Community Phronesis is to synthesize the ontology and epistemology through value and ethics in action

    Ontology: How to be; towards common good For what do we live?: the vision to the future and the

    commitment to it.

    Epistemology: How to know What is the truth?: the SECI spiral which synthesizes

    objective and subjective views.

    Creation: How one can transform ones self, firm and the environment

    Leadership promotes value-driven processes towards common good; i.e. a way of life rather than a tool to make money.

    66 Copyright. Nonaka, I. 2012