"The Knowledge-Creating Company: Unleashing Innovation through Tacit and Explicit Knowledge"

"The Knowledge-Creating Company: Unleashing Innovation through Tacit and Explicit Knowledge"

In today's uncertain economy, knowledge has become the ultimate source of competitive advantage for companies. The ability to continuously innovate and create new knowledge is what sets apart the knowledge-creating company. Unlike the traditional view of organizations as information-processing machines, these companies recognize the importance of tapping into the tacit knowledge of individual employees.

Tacit knowledge refers to the subjective insights, intuitions, and hunches that individuals possess. It is deeply rooted in action and personal commitment to a specific context. Matsushita Electric's efforts to build a better bread-making machine serve as a vivid illustration of distilling explicit knowledge from tacit knowledge. Explicit knowledge, on the other hand, is formal, systematic, and easily communicable. It includes product specifications, scientific formulas, or computer programs.

The process of knowledge creation involves moving from tacit to tacit, explicit to explicit, tacit to explicit, and explicit to tacit knowledge. As organizations share explicit knowledge, employees internalize it and use it to broaden their own tacit knowledge base. Articulation and internalization are crucial steps in this spiral of knowledge creation.

Metaphor and analogy play significant roles in the knowledge-creation process. Metaphors merge two different areas of experience into a single image, triggering the creative process and fostering commitment. Analogy, on the other hand, reconciles contradictions and makes distinctions, clarifying the similarities and differences between ideas. These processes culminate in the crystallization of concepts and their embodiment in a model that can be shared throughout the company.

Redundancy is a fundamental principle of organizational design in knowledge-creating companies. By consciously overlapping information, activities, and responsibilities, these organizations ensure the spread of new explicit knowledge. Strategic rotation and free access to company information further enhance redundancy. Challenging employees to reexamine what they take for granted fosters reflection and ensures continuous improvement.

During times of crisis or breakdown, ambiguity becomes a source of alternative meanings and fresh perspectives. New knowledge is often born in chaos, prompting organizations to rethink their traditional categories of knowledge. NEC, for example, has categorized its knowledge base in terms of key technologies, providing employees with a clear sense of direction.

In the realm of AI workflows, a common challenge is the "hurry up and wait" situation. While advancements in AI may accelerate certain parts of workflows, other steps, such as approvals and sign-offs, can slow down the process. To address this, companies must teach machines to be both creators and reviewers of content. By implementing a centralized and independent review process, the workflow can move forward seamlessly.

Alternatively, companies can focus on improving the slowest step in a workflow. Even if other steps still rely on human intervention, enhancing the efficiency of the slowest step can lead to overall workflow acceleration.

In conclusion, the knowledge-creating company thrives on the continuous generation and application of both tacit and explicit knowledge. By tapping into employees' subjective insights and fostering personal commitment, these companies drive innovation and secure a lasting competitive advantage. To succeed in the age of AI workflows, organizations must find ways to eliminate bottlenecks and streamline processes. Whether through teaching machines to be reviewers or improving the slowest step, the goal is to achieve a seamless and efficient workflow that maximizes the benefits of AI technology.