The mechanics of knowledge creation

In their book The Knowledge Creating Company[NONAKA1995], later summarized in the article A Theory of the Firm's Knowledge-Creation Dynamics[NONAKA1998], Japanese researchers Nonaka and Takeuchi lays down a model that describes the mechanics of knowledge creation. Knowledge creation can be understood in the context of developing an understanding of a problem as Orr shows in his study of field technicians. It can also be understood in the context of innovation, as in developing new ideas and new knowledge. Takeuchi and Nonaka—like Orr, Brown and Duguid— sees knowledge creation as a social activity. They go into great depths of explaining the mechanics of knowledge creation, expressing the social dimension by developing their own ontology of knowledge creating entities. Their epistemology, however, is based solely on the work of Michael Polanyi.

Before progressing with Takeuchi and Nonaka's theory of knowledge creation, it is worth dwelling briefly on Michael Polanyi for the sake of context. Polanyi was a Hungarian physician turned chemist turned philosopher of science. The critical component of Polanyi's work is an attack upon the ideal of objectivity as it was presented in science and philosophy at mid 20th century. His major contribution to the philosophy of science is the shift toward interest in scientific practice. With Polanyi shift of interest I come full circle with the research underpinning most of the material presented in this chapter. This shift is central to a great deal of later researchers both within the philosophy of science [KUHN1996](Kuhn 1996). but also other scientific areas [GEERTZ1973](Geertz 1973) [BOURDIEU1977](Bourdieu 1977) [SUCHMAN1987](Suchman 1987). It is reflected in the philosophers of science that Peter Naur leans upon when arguing that there is no appropriate scientific method for researchers [FEYERABEND1996](Feyerabend 1996). Polanyi's shift of focus from ideals to practice is also reflected in Duguid and Brown together with Julian Orr's research, when studying non-canonic work practices as opposed to canonic work practices.

Nonaka and Takeuchi, however, deal with the constructive philosophy of Polanyi's work. This work—as opposed to his critique of objectivity—represents Polanyi's developing interest in epistemology. Polanyi carefully works out his own epistemological model and sets forth a broad framework within which to think about knowledge as personal. His epistemology deals with two kinds of knowledge: tacit and explicit [POLYANI1958](Polanyi 1958). Explicit knowledge is formal and systematic. It is part of our everyday professional life, exemplified by manuals, books and lectures. It is the directed documentation we surround ourselves with in our professional life as software developers. It is the book used when learning a new programming language or a new development processes. These are hard and fast facts. It is quantifiable knowledge, but quantifiable knowledge is only the tip of the iceberg. There is more knowledge that can't be expressed in words and numbers. Experience, subjective insights and intuitions is knowledge that can't easily be expressed or shared, but nevertheless important knowledge. Polanyi calls this tacit knowledge. Tacit knowledge is something that is not easily visible and expressed. There are two dimensions to tacit knowledge. The technical dimension consists of skills and knowledge that is hard to pin down. This is the kind of knowledge and skills acquired over the years, but which are hard to explain or express. It can be exemplified by the expertise a master craftsman has acquired after years of experience. Tacit knowledge also has a cognitive dimension. This dimension consists of schemata, mental models, beliefs and perceptions so ingrained that we take them for granted. It is an image of reality, what is, and a vision for the future, what ought to be [NONAKA1998](Nonaka and Takeuchi 1998) [POLYANI1958](Polanyi 1958).

Building on Polanyi's view of knowledge Nonaka and Takeuchi look at the mechanics and processes by which knowledge is created. The key to understanding knowledge creation, they argue, lies in understanding the creation of organizational knowledge. Knowledge creation takes place along two dimensions: epistemology and ontology. Their epistemology, their theory of knowledge, is Polanyi's distinction between explicit and tacit knowledge. Equally important to their epistemology is the mobilization and conversion of tacit knowledge, their ontology. Ontology is concerned with the levels of knowledge-creating entities. To Takeuchi and Nonaka these levels are individual, group, organizational and inter-organizational. In this way they see knowledge creation, the construction of meaning, as a social activity more than simply an individual activity. Their view hinges on a "critical assumption that knowledge is created and expanded through social interaction between tacit knowledge and explicit knowledge" [NONAKA1998](Nonaka and Takeuchi 1998, p. 219). Knowledge is created and held by individuals. The challenge, as Nonaka and Takeuchi sees it, lies in sharing tacit knowledge between individuals throughout a group. They call this the knowledge spiral.

Socialization is the process of sharing experiences, and usually starts with building a field of interaction. This field facilitates the sharing of members' experiences and mental models. It is exemplified by apprenticeship, internship, and on-the-job training where one learns through observation, imitation and practice. Socialization is situated within a concrete context, as mere transfer of context free and abstract information makes little sense to the recipient. Shared experience of the context is important for successful socialization.

Externalization is the process of articulating tacit knowledge into explicit knowledge. In this mode tacit knowledge takes shape as metaphors, analogies, concepts or models. The ambiguity of these images are considered important, as it encourages reflection and interaction between individuals. Through reflection, dialogue and interaction members articulate their hidden tacit knowledge that is otherwise hard to communicate. Conversion of knowledge this way is typically seen in the process of concept creation and is triggered by dialogue and collective reflection. This is not an analytical activity. It is the domain of analogies and metaphors.

Combination is a process of systematizing concepts into a knowledge system. Individuals exchange and combine and enrich different bodies of knowledge. It is a process of reconfiguring existing information through sorting, adding, combining and categorizing explicit knowledge. By networking newly created knowledge and existing knowledge form other sections of the organization, new products, services or managerial systems emerges. Nonaka and Takeuchi mentions an MBA eduction as another example of this type of knowledge conversion.

Learning by doing is closely related to the fourth mode of knowledge conversion: internalization. Internalization is the product of the three previous modes. Shared bodies of knowledge are internalize as shared mental models or technical know-how by the individual. This may happen without re-experiencing other people's experiences. Nonaka and Takeuchi writes:

… if reading or listening to a success story makes members of the organization feel the realism and essence of the story, the experience that took place in the past may change into a tacit mental model. When such a mental model is shared by most members of the organization, tacit knowledge becomes part of the organizational culture. [NONAKA1998](Nonaka and Takeuchi 1998, p. 223)

Instead of describing a process model to facilitate the knowledge spiral, Nonaka and Takeuchi instead looks at the social factors that enables knowledge creation. They list five enabling conditions: intention, autonomy, fluctuation and creative chaos, redundancy, and finally requisite variety.

Intention is defined as "an organization's aspiration to its goals" [NONAKA1998](Nonaka and Takeuchi, p. 225). In a business environment this takes form of a strategy. For the intent and purposes of organizational knowledge creation, the essence of a strategy lies in the capability to acquire, create, accumulate and exploit knowledge. Organizational intention is also the most important criterion for judging the truthfulness of a given piece of knowledge.

Knowledge is created and held by individuals. Within the limitations given by the circumstances, individuals should be allowed autonomy. Autonomy is Nonaka and Takeuchi's second enabling condition. Autonomy is important to increase the chance of introducing unexpected opportunities. It also motivates the individual to create new knowledge. Original ideas emanate from autonomous individuals, diffuse within the team, and then become organizational ideas.

Fluctuation and creative chaos is the third organizational condition for promoting the knowledge spiral. Fluctuation is defined as "order without recursiveness" [NONAKA1998](Nonaka and Takeuchi 1998, p. 228). During fluctuation members of an organization experience a breakdown of routines, habits or cognitive frameworks. They begin to question the validity of their basic attitudes toward the world. This breakdown fosters knowledge creation as new concepts have to be sought through dialogue. Chaos can be the result of an organization facing a real crisis (like sudden drop in productivity) or it can be provoked from within by leaders evoking a sense of crisis in the organization. As with fluctuation, chaos increases the organizations attention to define the problem and solve the crisis situation. In this way a crisis can considered be "creative chaos", where the problem to be solved is identified. This comes in sharp contrast with analytical information-processing where a problem is simply given and a solution is found through combining known information.