The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation

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.

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All Customer Reviews
Average Customer Review:
5 of 12 people found the following review helpful:

Not even worth one star, 2005-11-21
I was very disappointed by this book. Not only was it painful to read, because it dragged on and was full of academic nonsense, the authors views were also unconvincing and based on old research.

This book is outdated and not relevant to the way Japan is today. The authors use a lot of research and examples from the 80s and even the 70s. They make the claim that Japanese firms experienced a lot of success in the late 70s and 80s because of their superior ability to "create knowledge." They seem to be in complete denial that Japan's economic bubble had anything to do with this "success" that they are talking about. Also, the book was written over 10 years ago, before the financial crisis and before people realized that a lot of this so-called success was just cooked in the books by accountants.

They do give some reasonable examples of knowledge creating firms that are successful, but that's all they are, just a few examples and not an accurate representation of the whole picture of Japanese Management. Also, most of the examples are of Japanese manufacturing firms. What about the service sector? Suspiciously they did not use examples of companies from Japan's service sector, which are extremely inefficient and not the text book perfect examples of successful "knowledge creating" firms.

The theories and models in this book are a bunch of overly abstract vague pretentious academic nonsense. The real life examples are so nebulously related to the theories and models that most successful (or unsuccessful) companies can be used as examples.

If you want to read a bunch of nonsense based on old research with the names of Harvard professors and some philosophy thrown in to make the nonsense seem legit and intelligent, then by all means, read this book. But if you are like me and want to learn about Japanese management, don't waste your time or money on this book.



21 of 23 people found the following review helpful:

BEWARE! Digital version is only a 10 page summary!, 2004-03-15
Don't get caught like I did.


5 of 9 people found the following review helpful:

From information-processing machine to knowledge-creating co, 2002-08-28
This book is the classic in the organizational learning approach. But it¡¯s more than that. This book is not about lean production or Japanese kaizen system, but about how to enhance a firm¡¯s adaptability to turbulent environment through knowledge creation. with suggesting new concept of knowledge-creation as the tangible base of organizational capabilities or innovation, this book serves as the bridge between organizational learning school and resource-capabilities view.
As the being to survive in environment, the firm processes signals or information from environment. Knowledge is the framework to process info to interpret the state of environment. Up to 1980s, the company was viewed as information-processing machine. Indeed, firm is the flow of information. That kind of view has been justified against the business reality. Actually, it¡¯s the very picture of bureaucratic organization which culminated in GM¡¯s M-form model. Here, CEO like Jack Welch is the hero. Such an organization is effective when the environment is stable and predictable. But since 1970s, things have changed. Uncertainties have been amplified with the hypercompetition on global scale. Now the framework to interpret the signal from environment, itself should incessantly and systemically be adapted to turbulent reality. Knowledge and innovation have come the words of the day. Not surprisingly, there has been growing dissatisfaction with traditional organizational structure. Kao¡¯s CEO, Maruta put it in this way: ¡®The intelligence of a firm does not come from the president nor top management. That must come from the gathering of all knowledge of all members.¡¯ This book is about to how to build organization as the effective innovation site. To do so, all the available knowledge in and out of company should be able to be mobilized and freely flow throughout the firm. For instance, front line employees are constantly in direct touch with the outside world. They can obtain access to the up-to-date info on the market, technology, or competitors. But their knowledge is, in most cases, not able to be expressed in explicit way. Generally, it¡¯s the tacit knowledge. But to survive more and more intensified competition, the firm should be apt to mobilizing their tacit knowledge. To achieve such a goal, task force or bottom-up organizational model emerged. In those model, the creative knowledge worker, in Peter Drucker¡¯s term, is the hero. But in those models, knowledge tends to be confined to narrow front line, and comes and goes with creative employees. And worse, the firm can¡¯t react as an efficient unit to threats from environment. As a result, innovation is the haphazard event. So there should be some integrating mechanism like hierarchy. To be efficient unit, knowledge should flow all over the company. Here, authors rediscover the significance of middle managers. They play the role of midwife and amplifier of knowledge from front line employees and between various divisions in the firm. They coordinate the flow of knowledge and maintain the firm as a coherent knowledge-creating unit. In short, the firm should be organized as the melting pot of member¡¯s knowledge. Authors take examples from Japanese firms to illustrate what¡¯s like such a site.


8 of 16 people found the following review helpful:

A look at knowledge creation, 2001-11-26
I came to this book through a reference in Novak & Gowin. What caught my eye was that someone was willing to talk about an epistemological stance other than the analytic, reductionist view held in science. For the most part, I found this book's understanding of Western epistemology to be reasonable; I can't speak for the Japanese epsitemology cited. What interested me, and for which I recommend the book, is their view of knowledge creation. The case studies lend weight to their view, but they do explicate a possible model for turning subjective knowledge into explicit knowledge. They suggest a management model for making it happen. The book is very well written and edited.

I believe the book needs a very careful read *outside* the business community. I would put this book down as the business version of Feynman's *The Character of Natural Law*.


5 of 10 people found the following review helpful:

An essential book on knowledge management, 2001-09-28
This is perhaps one of the most important books presently available on knowledge management. The authors demonstrate how 'knowledge' is vital to innovation within Japanese firms, with clear distinction made between 'tacit' and explicit' knowledge. An effort is made to distinguish the differences between Japanese and Western firms through an emphasis on the importance of 'tacit' knowledge and a 'middle-up-down' management process. Other than Chapter 2 (a review of philosophical background relating to epistemology which might put some readers off), this book has minimal jargons and complexities and would be an easy and enjoyable read even for non-academics. The arguments presented by the authors are well-illustrated with relevant industrial examples. Overall, this is a book that not only brings a new perspective to knowledge management but also raises questions for the ardent researchers who might ponder over its relevance to non-Japanese firms.

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