The Knowledge-Creating Company
Ikujiro Nonaka (1991)
One certain source of lasting competitive advantage is knowledge.
Successful companies are those that consistently create new knowledge, allocate it widely throughout the
organization, and quickly embody it in new technologies and products.
These activities define the “knowledge-creating” company, whose sole business is continuous innovation.
Managers everywhere recognize the quality of innovation.
The centerpiece of the Japanese approach is the recognition that creating new knowledge is not simply a
matter of “processing” objective information, it depends on tapping the tacit and often highly subjective
insights, intuitions, and hunches of individual employees and making those insights available for testing
and use the company as a whole.
The key to this process is personal commitment, the employees’ sense of identity with the enterprise and
“A company is not a machine, but a living organism.”
Much like an individual, it can have a collective sense of identity and fundamental purpose.
This is the organizational equivalent of self-knowledge, a shared understanding of what the company
stands for, where it is going, what kind of world it wants to live in, and how to make that world a reality.
The knowledge-creating company is more about ideals, than ideas.
To create new knowledge means quite literally to re-create the company and everyone in it, in a nonstop
process of personal and organization self-renewal.
The Japanese approach is an approach that puts knowledge creation exactly where it belongs: at the very
center of a company’s human resource strategy.
THE SPIRAL OF KNOWLEDGE
New knowledge always beings with the individual.
The individual’s personal knowledge is transformed into organizational knowledge valuable to the
company as a whole.
Making personal knowledge available to others is the central activity of the knowledge-creating company.
It takes place continuously and at all levels of the organization and can take unexpected forms.
Explicit knowledge: formal and systematic knowledge, that can be easily communicated and shared (in
product specifications or scientific formula or a computer program).
Tacit knowledge is highly personal, it is hard to formalize and, therefore, difficult to communicate with
others. Tacit knowledge is also deeply rooted in action in an individual commitment.
At the same time, tacit knowledge has an important cognitive dimension. It consists of mental models,
beliefs and perspectives so ingrained that we take them for granted, and therefore cannot easily articulate
them. These implicit models profoundly shape how we perceive the worlds around us.
The distinction between tacit and explicit knowledge suggest 4 basic patterns for creating knowledge in an
1. From TACIT to TACIT
One individual shares tacit knowledge directly with another.
Skills are learned through observation, imitation and practice.
2. From EXPLICIT to EXPLICIT
When an individual combines discrete pieces of explicit knowledge into new explicit information.
This combination does not really extend the company’s existing knowledge base.
3. From TACIT to EXPLICIT
When one can articulate the foundations of its own tacit knowledge, thus allowing it to be shared
with the others.
4. From EXPLICIT to TACIT
Employees use it to internalize new explicit knowledge.
They use it to broaden, extend, and reframe their own tacit knowledge.
In the knowledge-creating company, all four of these patterns exist in dynamic interaction, a kind of
spiral of knowledge. (socialization-combination-articulation-internalization)
Articulation and internalization are the critical steps of the spiral of knowledge: they both require personal
FROM METAPHOR TO MODEL
To convert tacit knowledge into explicit knowledge means finding a way to express the inexpressible.
One of the most powerful management tools for doing so is the store of figurative language and
symbolism that managers can draw from to articulate their intuitions and insights.
a) One kind of figurative language that is especially important is METAPHOR.
A metaphor is a distinctive method of perception.
It is a way for individuals grounded in different contexts and with different experiences to understand
something intuitively using imagination and symbols without the need for analysis or generalization.
The analogy is a more structured process of reconciling contradictions and making distinctions.
By clarifying how 2 ideas in 1 phase actually are alike or not alike, the contradictions incorporated into
metaphors are harmonized by analogies.
The analogy is an intermediate step between pure imagination and logical thinking.
c) Finally, the last step in the knowledge-creating process is to create an actual MODEL, more
immediately conceivable than a metaphor or analogy.
In the model, contradictions get resolved and concepts become transferable through consistent and
In reality, it is hard to distinguish them from one another.
Still, the 3 terms capture the process by which organizations concert tacit knowledge into explicit