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The knowledge-creating company: How japanese companies create the dynamics of innovation – Nonaka and Takeushi (1995)

Summary of the book:

The knowledge-creating company: How japanese companies create the dynamics of innovation – Nonaka and Takeushi (1995)

  1. Introduction to knowledge organizations
  2. Knowledge and management
  3. Theory of organizational knowledge creation
  4.  creating knowledge in practice
  5. Middle-up-down management process for knowledge creation
  6. A new organizational structure
  7. Global organizational knowledge creation
  8. Managerial and theoretical implications


1.- Introduction to knowledge organizations

  • Three key characteristics of knowledge creation:
    •  Metaphor and analogy
    • From personal to organizational knowledge
      • Although we use the term “organizational” knowledge creation, the organization cannot create knowledge on its own without the initiative of the individual and the interaction that takes place within the group. –p13
    • Ambiguity and redundancy
    • Ambiguity can prove useful at time not only as a source of a new sense of direction, but also as a source of alternate meanings and a fresh way of thinking about things. In this respect, new knowledge is born of chaos – p14
    • Redundancy is important because it encourages frequent dialogue and communication. This helps create a “common cognitive ground” among employees and thus facilitates the transfer of tacit knowledge. – p14

 2.- Knowledge and management

3.- Theory of organizational knowledge creation

  • Epistemological dimension: explicit knowledge / tacit knowledge
  • Ontological dimension: knowledge level (individual/group/organization/inter-organization)
Tacit knowledge (subjective)

Explicit Knowledge (objective)

Knowledge of experience (body) Knowledge of rationality (mind)
Simultaneous knowledge (here and now) Sequential knowledge (there and then)
Analog knowledge (practice) Digital knowledge (theory)
  • Four modes of knowledge conversion
    • Socialization: from tacit to tacit
    • Externalization: from tacit to explicit
    • Combination: from explicit to explicit
    • Internalization: from explicit to tacit


TACIT Knowledge

EXPLICIT Knowledge


TACIT Knowledge



EXPLICIT Knowledge



  •  Contents of knowledge and the knowledge spiral
    • First, the socialization mode usually starts with building a “field” of interaction. .. sharing of member’s experiences and metal models. Second the externalization mode is triggered by meaningful “dialogue or collective reflection”, in which using appropriate metaphor or analogy…Third, the combination mode is triggered by “networking” newly created knowledge and existing knowledge from other sections of the organization, thereby crystallizing them into a new product, service, pr managerial system. Finally, “learning by doing” triggers internalization. – p71





  • tacit knowledge if individuals is the basis of organizational knowledge creation – p72
  • The mobilized tacit knowledge is “organizationally” amplified through four modes of knowledge conversion and crystallized at higher ontological levels. We call this the “knowledge spiral” – p72
  • This process is exemplified by product development. Creating a product concept involves a community of interacting individuals with different backgrounds and mental models. – p73


  • Enabling conditions for organizational knowledge creation:
    • Intention: (organization’s aspiration to its goals – p74)
    • Autonomy
    • Fluctuation and creative chaos (which stimulates the interaction between the organization and the external environment -p78). Chaos is generated naturally when organization faces areal crisis…. it can also be generated intentionally when organization’s leaders try to evoke a “sense of crisis”… by proposing challenging goals.
    • Redundancy
    • Requisite Variety



  • Five-phase Model of the organizational Knowledge-creation process (p83)
  1. Sharing tacit knowledge
  2. Creating concepts
  3. Justifying concepts
  4. Building an archetype
  5. cross-leveling of knowledge
  • The truly dynamic nature of our theory can be depicted as the interaction of the two knowledge spirals over time. Innovation emerges out of these spirals.

4.- Creating knowledge in practice




5.- Middle-up-down management Process for Knowledge Creation

  • Simply put, knowledge is created by middle managers, who are often leaders fo a team or task force, through  a spiral conversion process involving both the top and the front-line employees (i.e. bottom). -p127
  • Middle managers are the key to continuous innovation. -p127





Knowledge-Creating Crew

  • In fact, creating new knowledge sis the product of dynamic interaction among the following three players: (1) knowledge practitioners, (2) knowledge engineers, and (3) knowledge officers. -p151
  • (1) knowledge practitioners: front-line employees and line managers
    • high intellectual standards
    • strong sense of commitment to re-create the world according to their own perspective
    • wide variety of experiences, both inside and outside the company
    • skilled in carrying a dialogue with customers and colleagues
    • open to carrying out candid discussions as well as debates with others -p154
  • (2) knowledge engineers: middle managers
    • capabilities of project coordination and management
    • skilled at coming with hypotheses in order to create new concepts
    • ability to integrate various methodologies for knowledge creation
    • proficient at employing metaphors in order to help others generate and articulate imagination
    • engender trust among team members
    • ability to envision the future course of action based on an understanding of the past
  • (3) knowledge officers: top managers
    • ability to aerticulate a knowledge vision in order to gicve a copany’s knowledge-creating activitiesa  sense of direction
    • capability to communicati the vision, as well as teh corporate culture on whi it is based, to project team members
    • capability to justiofy the quaklity of hte created knowledge based on organizatuionap criteria or standards
    • uncanny talent for selecting the rioght project ledaer
    • willingness to create chaos within the project team by, for example, setting inordinately challenging goals
    • skillfulness in intearctign with team members on a hands-on basis and soliciting commitment from them; and
    • capability to direct and manage the total process of orgnaizationasl knoweledge creation. -p158

6.- A new organizational structure

In search of a synthesis – the hypertext organization

  • A business organization should have a nonhierarchical, self-organizaing structure workign in tandem with its hierarchical formal structure. This potin is particularly important for organizaational knoledge creation -p166
  • …hypertext organization is made up of intercoinnected layers or contexts: the business ssystem, the project team, and teh knowledge base. -p167





  • The central layer is the business layer in which normal, routine operations are carried out. Since a bureacratic structure is suitable for conducting routine work efficiently, this layer is shaped like hierarchical pyramid. The top layer is the “project team” layer, where multiple project teams engage in knowledge creating activities such as new product development… at the bottom is the “knowledge base” layer, where organizational knowledge generated in the above two layers is recatergorized and recontextualized. This layer does not exist as an actual organizational entity, but is embedded in corporate vision, organizational culture, or technology…. While corporate vision and organizational culture provide the knowledge base to tap tacit knowledge, technology taps the explicit knowledge generated in the two other layers… -p168
  • the key characteristic of the hypertext organization is the ability of its members to shift contexts –p170
  • the efficiency and stability of the bureaucracy is combined with the effectiveness and dynamism of the task force in a hypertext organization. Moreover, it adds another layer, the “knowledge base”, that serves as a clearinghouse for the new knowledge generated in the business system at the project team layers.
  • A hypertext organization should not be confused with a matrix structure, which is used to actually two or more different tasks in a conventional hierarchical organization. P170
  • in the matrix structure, and organization member must belong or report to two structures at the same time. In contrast, an organization member in a hypertext structure belongs or reports to only one structure at one point in time.
  • matrix structure is not primarily oriented toward knowledge conversionin a hypertext organization, knowledge contents are combined more fixedly across layers and over time.
  • Since deadlines are set for the projects, the resources and energy of the hypertext organization can be used in a more concentrated manner to fulfill the goal of the project during the project period.
  • … in a sense, a hypertext organization fosters middle-up-down management


7.- Global organizational knowledge creation



8.- Managerial and theoretical implications

  • A summary of our major findings
  1. tacit and explicit knowledge
  2. interaction between tacit and explicit knowledge is performed by an individual, not by the organization itself
  3. the core of the organizational knowledge creation process takes place at the group level, but the organization provides the necessary enabling conditions. The knowledge spiral: invention, autonomy, fluctuation and creative chaos, redundancy, and requisite variety
  4. organizational knowledge duration is nonlinear and interactive. Is a never-ending iterative process
  5. middle up down management
  6. hypertext organization
  7. we need to integrate the merits of both the Japanese and Western methodologies to develop a universal model of organizational knowledge creation
  • practical implications
  1. create a knowledge vision
  2. develop a knowledge crew
  3. Build high density field of interaction at the front line
  4. Piggyback on the new product development process
  5. adopt middle-up-down management
  6. switch to a hypertext organization
  7. construct a knowledge network with the outside world
  • theoretical implications
  • false dichotomies
  1. tacit / explicit
  2. body / mind
  3. individual / organization
  4. top-down / bottom up
  5.  bureaucracy / task force
  6. relay / rugby
  7. East / West



Creative Ecologies: Where thinking is a proper job – John Howkins (2009)


Creative Ecologies: Where Thinking is a Proper Job
Published by UQP in 2009, Transaction (USA) in 2010

Author’s web: creativeeconomy.com


  • The old question ‘Where do you want to live?’ is now ‘Where do you want to think’ – p2
  • Modern ecology is part of the shift in thinking generated by quantum physics and system theory, from the old view based on reductionism, mechanics and fixed quantities to a new view based on holistic systems where qualities are contingent on the observer and on each other – p3
  • Creative or repetitive? – p5
Creativity Repetition
Diverse / variegated Unified
Implicit Explicit
Unstable (challenges/questions) Stable (safe/ answers)
Fluid/emerging Rigid/ settled
Feedbcka Little feedback
Learning Education
Networks Hierarchies
Desires beauty Desires irder
Access Control
High automnmy / low dependence Hidh dependence / low autonomy
Complex Simple
Self-orgnaising Closed, shielded
Quality Quantity
Systemic / whole Fragmented / parts
Analogue Digital (especially binary0
Cyclical Linear
Process / collaboration Event / Competition
Mind Body

The Challenge

Learning to look

  • Vincent van Gogh’s nine weeks with Gauguin in his studio were astonishingly creative for both of them. Van Gogh produced 49 oil paintings, several watercolours and hundreds of drawings and Gauguin about one-third as many. – p8


  • Creativity is the use of ideas to produce new ideas. The input, the original idea, may be novel or familiar…. The output’s commercial value may depend on this uniqueness …or on how easily it can be copied. – p9
  • This raw creativity is not the same as talent, which is a kind of expertise, usually learned and repeatable. – p9
  • Creativity is not the same as innovation. Creativity is internal, personal and subjective, whereas innovation is external and objective. Creativity often leads to innovation, but innovation seldom leads to creativity – p10
  • Business has seen creativity and innovation as specialist functions. I call this repetitive economy. –p10
  • But while the commodities and manufactures goods in a classical economy are physical and quantifiable, the inputs and outputs of a creative economy are subjective and qualitative –p11
  • A creative ecology is a niche where diverse individuals express themselves in a systemic and adaptive way, using ideas to produce new ideas; and where others support this endeavor even if they don’t understand it. These energy-expressive relationships are found in both physical places and intangible communities; it is the relationships and actions that count, not the infrastructure. –p11


  • Maslow spent years clarifying and refining what he meant by self-fulfillment, and in 1970, just before he died, he replaced the term with two others: the ‘aesthetic (appreciation of the beauty) and ‘cognitive’ (desire for knowledge and particularly understanding knowledge). – p18


  • Network economy, knowledge economy… all these labels miss something vital. … We need to treat people not as an economic unit but as autonomous, thinking individuals…. The theory of creative ecology … tries to answer:


  • What is the nature of creativity?
  • What is the nature of creative work and the creative economy?
  • What is their relation to other factors of change, such as innovation?
  •  What should governments do, if anything?


First Ideas

  • DCMS : thirteen industries: advertising, architecture, art and antiques, crafts, design, designer fashion, film and video, interactive leisure software, music, performing arts, publishing, software and computer services, and TV and radio. – p22
  • My own added R&D and toys and games, and I referred to ‘core’ industries with significant multiplier effect, especially in media, advertising, design and software. – p23

Individuals and occupations

  • The nature of creative work means that industries are not the main characters in  the story… the large number of people who are full-time creative workers but work outside an industry requires an economic model based on individuals and what people do… -p25
  • Florida’s approach generates a more subtle and more multi-dimensional approach and helps us to relate creative work to demographic and socio logical conditions that facilitate it.

Cores and circles – p26

  • Britain’s BOP Consultants: 1) creative Originals (i.e. art) ; 2) creative content (music); 3) creative experiences (live performances); 4) creative services (advertising)
  • NEFA: core, cultural periphery and creative industries
  • Kern European Affairs (KEA): 1)  Cultural products that are non-industrial; 2) Cultural industries whose outputs are exclusively cultural; 3) Creative industries and activities that incorporate elements of 1 and 2; 4) related industries specializing in equipments to facilitate the use of copyright works.
  • Ambiguity of these descriptions…blurred relationship….


  • …the economic conundrum (infinite need, limited resources) collapses. – p30
  • Whereas Schumpeter focused on the entrepreneur’s skills in fomenting creative destruction, the creative ecology treats all individuals as potentially creative, thus generating greater scale and scope. – p31



Scope and scale

  • We enjoy crossovers between art and science, between fashion and technology, between fact and fiction (i.e. Tusquets and Krasu in auditorium in Grand Canaria) – p37
  • McKinsey consultants: “45% of British jobs require the workers to exercise their tacit knowledge, or talent… 70% of new jobs in Britain and America require personal judgment – p38
  • Everyone can go. The creative ecology has very low barriers to entry
  • Although creativity has few barriers to entry except education and ambition, some creative businesses can face very high barriers of talent, capital, regulation and market power… few large companies that dominate distribution, especially where they can achieve significant economies of scale.
  • Exponential variety: … varied because they express personal meanings and contradictory because there is virtually no consensus.
  • These two factors, low barriers to entry and exponential variety, result in high level of volatility. Life in an ecology requires rapidly adaptive behavior of an organism ist o survive, let alone develop. – p40
  • Autonomy and openness… diversity and collaboration. Compared with previous emphases on institutions and mechanics, there are themes of fluidity and fuzziness, and of emergent thinking. – p42

The adaptive mind

  • By including an awareness of the self and perception, deep ecology is especially relevant to creativity. – p45
  • Four aspects of ecological thinking relevant to creativity and innovation:

1. Diversity: tolerance (Florida)
2. Change: theory of evolution

  • There is not a gene for creativity however “there may well be genetic sequences that predispose people towards characteristics that assist creativity, such as reasoning, memory and spatial awareness. P50
  • Whereas biological evolution precedes by increasing divisions into separate species, cultural change occurs by borrowing and mixing; and whereas evolution is Mendelian (inherited, digital), cultural change is Lamarckian (learned, analogue), – p51

3. Learning

4. Adaptation

  • Imitation
  • Communities
  • Collaboration
  • Competition


Creative places

  • Instruction will be replaced by dialogue in which listening ia a respected and enjoyable as speaking. Since it is impossible to anticipate a new idea or the appropriate group to develop it, you will have access to many different groups and the ability to form an indefinitely large number of new ones. –p72
  • This process can flourish in large organizations so long as they operate as a network of small groups. ..p72
  • A creative dialogue is informal –p72
  • My own RIDER system consists of Review, Incubation, Dreams, Excitement and Reality Checks – p74
  • Cities have become icons of the creative economy: their startling new building. Their crowds, clusters and cultural diversity, their elite stars and industry gatherings, … p74
  • Cities: Creative magnets (p76)….CREATIVE CITIES
  • Cities score high in our four indicators of a creative ecology: diversity, change, learning, and adaptation. – p78
  • Urban-based collaboration is one of the most powerful forces in contemporary social change -p79
  • Architect Jaime Lerner, the charismatic mayor of Curitiba in southern Brazil, invented the idea of “Acupuntura Urbana” to describe the insertion of building-as-events into the urban landscape to spice it up. (Joern Utzon, Gehry, Zaha Hadid, Starck, Moneo..)
  • In ecological terms, cities are prime energy exchangers. They attract people that are both producers and buyers –p81
  • The focus now is on sustainability. Can cities,,, lead in creating sustainable eco-systems? – P82
  • The internet: The world’s most adaptive market –p82
  • The internet’s greatest impact is on individual autonomy and network collaboration. These may seem mutually incompatible. –p85

Negotiating uncertainty

  • If we want to turn an idea into money, we have to negotiate a contract.
  • The ten factors in these negotiations are:
  1. Serial change
  2. Niches
  3. The personal difference
  4. Novelty
  5. Meaning is uncertain
  6. Value is uncertain
  7. Demand is uncertain
  8. The network office
  9. Copyright is currency
  10. Mixed portfolios

The way forward

  • Schumpeter rejected the classical assumption that supply and demand would always resolve themselves around equilibrium point. ….He was more interested in the process of moving from one state to another. – p106
  • The claims for today’s creative ecology rest in Schumpeter’s first claim about creative destruction being right and his second claim about hostile intellectuals being wrong. – p107
  • An economic system that consists entirely of state- or oligarchy-owned resources of land, capital and labour dos not prevent creativity but it does prevent a creative ecology. – p108
  • In some European countries, the creative ecology is seen as the side-effect of a a decline in manufacturing,
  • Japan’s weakness is its uniformity –p110
  • China: its main vulnerability is its dislikes of diversity,. Perhaps matched by the current shortness of creative talent, but its creative ecology has grown faster than any other country, ever.
  • East and West: Western companies emphasize the novelty of what is produced and sue ‘breakthrough’ and ‘disruption’ as words of praise….There are signs of change on both sides. –p114

New places, new policies

  • A government’s job is to know and to control, but creativity is often not knowable and never controllable. – p117
  • Governments that want a creative ecology will carry out a policy audit  on their laws and regulations to ensure that they are fit for the ecology… Three examples: learning to learn, copyright (balancing ownership and access) and international trade. – p120


Three steps to growth

  1. Everyone is creative
  2. Creativity needs freedom
  3. Freedom needs markets
  • In this sense, freedom is a primary tool that enables one to use other tools such as technology and money.
  • A market of some sort is a necessary condition for economic activity.
  • Creativity needs an indefinitely large number of market-places: social marketplaces… Commercial marketplaces… -p134

The new billion

  • There will always be a tension between private creativity and the public transactions that result, between the individual and the group, and between freedom and regulation.
  • Looking for a job: every few years, a billion young people are looking for their first job (thinking is a proper job).


Some references:


European Ambassadors for Creativity and Innovation : Manifesto



Conference by Jonathan Wareham at ESADE


Conference about New Trends in Technology and Innovation

Conference slides: here

Jonathan Wareham, professor at ESADE, did today a presentation about Play, Design and Services at ESADE Forum.

While studying the ESADE’s EMBA, Jonathan did a course on technology, I remember he talked about CSS and the power of the easy content flow in internet. All the information was available in any format, the information could move freely and with the CSS it was put into different formats and integrated in mashups. I don’t think many people got the message and many collegues found the speech boring o not interesting enough or simply they didn’t understand the application of what was being explained in their current professional lifes.

Today Jonathan talked about the importance of the play in the creativity and innovation.
He mainly based his speech on ideo, the californian company based in Palo Alto, leader in innovatio in product design (but also service design).

I liked the quote of George Bernard Shaw:

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adpat the world to him. Therefore all progress dependson the unreasonable man.”

This sentence remind me of Steve Jobs, and his belief in that him and his team where creating something that would change the world while designing the Macintosh, in the 70’s.

Play & Game

  • More fun
  • Experimental
  • Physiology, dopamine, increased memory

Design thinking, video de ideo.com, abcnews video:

They consider themselves specialists in the process of innovate.

Team-work, interdisciplinary teams, no bosses, work based in having fun
Dont sit at your desk, go out, talk to people, experience, communicate, interchange ideas

Stay focused, don’t be afraid of wild ideas, embrace them.

Ideo’s work process:

• empathy
• game
• Quantity of  ideas
• Wicked problems
• Emotion, experience and feelings, not rationality

3.-Rapid prototype