Source of Continuing Competitive Advantages in Businesses - Essay Example

Academic Paper Review: ‘Nonaka, I (1991), "The knowledge creating company,” Harvard Business Review, 69 (6), 96104 Purpose The article “The knowledge creating company” is worthy to community members as it entails important themes on the definition,production and utilization of knowledge. The article comprises various aspects that are supported by different authors who provide extensive philosophical introductions into the Eastern and Western epistemology and explain case studies from the Japanese industry. The purpose of this article is to show that knowledge is the only sure source of continuing competitive advantages in businesses. Nonaka (2008) noted that technologies advance,markets shift,competitors increase,and some products and services become obsolete regularly therefore the succusseful businesses are those that develop new knowledge and disseminate it in the enterprise quickly to manufacture new products and technologies. Maybury et al. (2002) noted that those are the activities that define knowledge-creating company and their business is to ensure continuous innovation. The author of the article sets out to achieve success in businesses through the use of knowledge to achieve the firms goals and objectives. The application of knowledge by the successful Japanese competitors for instance,Matsushita,Kao,Canon,Sharp,NEC,and Honda have made them famous for their capabability to be flexible to market changes,quick responces to customer needs,develop new markets and products and to dominte the emerging technologies. Ichijo and Nonaka (2006) stated that the secret of succeeding in business is the unique approach in the management of creating new knowledge. The article stresses the importance of the Japanese approach that normally seem incomprehensible and odd to other businesses but are used to develop new knowledge of running successful firms. Nonaka (1991) gave an example of the slogan “Theory of Automobile Evolution” that is a design concept that led to the development of the innovative urban car ,Honda City. The purpose of the article is to explain the focus of the Japanese approach that depends entirely on tapping the tacit and subjective intuitions,hunches of the employees,insights and hence testing those insights and enabling the business to use them as whole. Shibata (2006) noted that the key to successful processes is the ability of the employees to be personally committed to their tasks,their sense of identity with the business and its operation. The author in this article is seeking to present the importance of the business managers to mobilize the workers committment to their work and exemplifying implicit knowledge in actual products and technologies that require them to be comfortable with the images and slogans. The article presents the holistic approach to knowledge that is applied in the Japanese companies basing on the fundmental insight that Companys are not machines but living organisms. Businesses are viewed as living organisms because they have the ability to have a collective fundamental purpose and a sence of identity which is the equivalent of self-knowledge that is a shared comprehending of what an enterprise stands for,the kind of world it lives in,where it is heading and most importantly ways to make its world a reality (Nonaka,1991). The author is seeking to present that new knowledge begins with an individual and hence the business managers should be brilliant since their intuitive sense of the market trends is the catalyst of significant new product concepts. Buchenau and Suri(2000) noted that personal knowledge of individuals is normally converted into organizational knowledge that is valuable to the enterprise as a whole. The process of enabling other people to share personal knowledge is the fundamental activity of knowledge creating company and it should occur continuously at all the levels of the business. The article presents the tacit and the explicit knowledge and how they are applied in business. Shibata (2006) defines tacit knowledge as highly personal since it is difficult to formalize and to communicate to others while explicit knowledge is systematic and formal and hence can be shared and communicated easily in product specifications or computer programs. The article displays four basic patterns involved in creating knowledge in businesses: From tacit to tacit: This is where individuals share tacit knowledge directly with each other. Nonaka (2008) noted that tacit skills can be learnt through imitation,observation and practice to become part of the individual’s knowledge base. From explicit to explicit: This is the knowledge from different departments in the organization that is compiled to form new knowledge. From tacit to explicit: For instance when Tanaka from the article uses her tacit knowledge of bread making and converting it to explicit knowledge and hence sharing with the other employees. From explicit to tacit: This is the process whereby explicit knowledge is imparted throughout the business and then other employees use it to extend,reframe,and to broaden their tacit knowledge. The contribution of the article to the subject area Nonaka, (1991) Nonaka (2008), Shibata (2006) all agree that in the current world, the ability to utilize and create knowledge are believed to be the most significant sources of various business sustainable competitive advantages. Nonaka (1991) and Culpan (2002) both regard creation of knowledge as dialectical processes that involve a variety of contradictions that are normally synthesized through vigorous interactions among organizations, the environment, and the society members. According to Nonaka and Teece (2000),knowledge is developed in the spiral passes through various antithetical concepts for instance macro and micro, chaos and order, whole and part, induction and deduction, other and self, efficiency and creativity, and explicit and tacit. The business owners should realize that knowledge creation is a rising process where diverse entities such as groups, individuals, organizations among others transcend the border of the old into new individuals by obtaining new knowledge. Shibata and Takeuchi (2006) observed that creating organizational knowledge is more of a trial and error and bodily experience because it is about learning from other people and mental modeling. Nonaka (1991) and Wallace (2007) both agree that the ability of an enterprise as a whole to develop new knowledge and to spread it all through the business and then embodying it in systems, services, and products leads to continuous competitive advantages. According to Wallace (2007), the two types of knowledge comprise of implicit and explicit. He defined implicit knowledge as the knowledge that is obtained from inherited practices and that is passed through the guidance, observation, and apprenticeship of a skilled worker. Tsai (2003) noted that implicit knowledge can be divided into cognitive implicit that displays the wealth of presumptions ,experiences, and beliefs that are shared with various cultural groups such as families ,nations ,company among others that are not articulated commonly because they are presumed to be familiar to individuals and technical implicit that corresponds to the know-how of the individuals. Explicit knowledge implies the use of manuals, books, articles, guides, and printed procedures that express data clearly through images, sounds, language, and other various means of communication (Montano, 2004). Both Nonaka (1991) and Henry (2006) agree that the contrast of explicit-implicit is a significant factor in knowledge creation of a company. Neider and Scriesheim (2007) stated that the source of implicit knowledge is ideation during redundancies, which are the competences and the competing efforts of individuals and new product development within the organization. In regards to ideations, most of the authors such as Tsai (2003) and Culpan (2002) agree that the roles of analogous or metaphorical ambiguity and thinking for new product development are highlighted as the important factors that determine success in the Japanese knowledge creating companies. In the second phase of explicit-implicit conversion, four processes in which knowledge is transformed include socialization, externalization, combination, and internalization that form the spiral process. Socialization is the beginning of the spiral process where knowledge is shared with other individuals through observation, dialogue, guidance, and imitation. Socialization activities for businesses could involve consultation of various users and research done by managers and employees (Choo and Bontis, 2002). Externalization phase is the stage where explicit knowledge materializes. Non-conceptual observations and metaphorical dialogues are converted to explicit knowledge that therefore becomes external to the business. After the creation of explicit knowledge, the processes are refined further in the combination phase. Henry (2006) defined combination as the process that involves systemizing various concepts into knowledge systems. The combination phase entails merging dissimilar aspects of explicit knowledge. Internationalization is the last phase of knowledge processing and it is the successful transmission of knowledge to an individual from a database or a book to another individual. Nonaka and Teece (2000) noted that the moment the person is capable of utilizing the novel knowledge then it is successfully internalized. Internalization involves sharing experiences, expertise, and feelings and hence connects to the diverse design approaches that are famous in product design, thinking, and interaction. The four phases of knowledge development infiltrate through the ideal enterprise. The authors agree that knowledge should be passed on all the levels of business to be exploited. Findings and conclusions of the article Knowledge creation is the secret to the successful ventures of the Japanese companies because it brings about innovation spirally, incrementally and continuously. The success of the Japanese companies is not based on their ability to access cheap capital; or cooperative relationships with suppliers, customers, government agencies; or manufacturing process; or seniority systems and lifetime employment but their ability to use unique strategies such as analogies and metaphors to gain competitive advantages (Nonaka, 1991). Creation of knowledge is the secret for the businesses to be ahead of their competitors since they can use those strategies when the markets shift, when competitors multiply, and when technologies proliferate. Some managers do not understand how to manage and to create knowledge in their business hence they do not know how to exploit it as stated in the article. The Western managers should adopt the Japanese approach of using cryptic slogans that may sound silly, incomprehensible, or odd as effective tools in the creation of knowledge. The successful Japanese companies used slogans such as the Theory of Automobile Evolution” that was used to create Honda City the urban car, analogies for instance the beer can that caused a breakthrough during the designing of the Canon’s revolutionary mini-copier. The Sharp Company used made-up words for example optoelectronics that led to the development of first products that defined new markets and technologies. Maybury et al. (2002) stated that the process of creating knowledge involves tapping tacit information and subjective intuitions, hunches and insights of the employees then using those ideas to solve issues at the business. Shihata and Takeuchi (2000) suggested that companies should be treated as living organisms in order to have a sense of identity and purpose hence making the world a reality. Creating knowledge implies re-creating the business and all the individuals involved in a continuous process of organizational and personal self-renewal. Critical appraisal The explanation of knowledge creation and its significant provided by Nonaka (1991) and other authors is enticing and informative to those who aim to operate successful businesses such as the Japanese companies. I agree with most of the authors’ findings and conclusions based on the knowledge creation as they analyze how the various types of knowledge are exercised, what they mean, and how they interact. I support the description of tacit knowledge and explicit knowledge. I agree with the authors that the application of analogies, models, and metaphors have direct inferences on how businesses design their organization and define their responsibilities and managerial roles. I agree that other businesses should emulate the Japanese companies that use redundancy as a fundamental principle. Henry (2006) defined redundancy as the conscious overlapping of managerial responsibilities, business activities, and company information. Organizations should practice redundancy since it facilitates frequent communication and dialogue. Shibata and Takeuchi (2006) stated that businesses should ensure that employees have free access to information to build redundancy. On the other hand, I feel that the authors should have added a third dimension that is significant for creating knowledge in innovative business ventures. Neider and Schriesheim (2007) stressed that requisite variety is not restricted to the knowledge bases acquired by the members in the organization but their diverse values ,feelings ,insights, and personal characteristics that could influence their decision making ,performance, and production within the business alike cognitive and technical implicit knowledge. The perspective discussed by the authors that Japanese companies are successful in innovation games through their application of knowledge is also their weak spot. This is because as they reveal the cultural biases and fallacies in European and US R&D (Research and development) mindset, they remain blind to the intrinsic problems in their own Japanese R&D culture. References Buchenau, M., and Suri, J.F. (2000). Experience prototyping. Paper presented at 3rd conference on Designing interactive systems: processes, practices, methods, and techniques, New York City, New York, United States. Choo, C. W., and Bontis, N. (2002). The strategic management of intellectual capital and organizational knowledge. Oxford, Oxford University Press. Culpan, R. (2002). Global business alliances theory and practice. Westport, Conn, Quorum Books. Henry, J. (2006). Creative management and development. London, Sage Publications. Ichijo, K., and Nonaka, I. (2006). Knowledge Creation and Management New Challenges for Managers. Oxford, Oxford University Press, USA. Maybury, M. T., Morey, D., and Thuraisingham, B. M. (2002). Knowledge management: classic and contemporary works. Cambridge, Mass. [u.a.], MIT Press. Montano, B. (2004). Innovations of knowledge management. Hershey, PA, IRM Press. Neider, L. L., and Schriesheim, C. (2007). International management. Charlotte, NC, Information Age Pub. Nonaka, I. (2008). The knowledge-creating company. Boston, Mass, Harvard Business Press. Nonaka, I., and Teece, D. J. (2000). Managing industrial knowledge: creation, transfer and utilization. London, SAGE. Nonaka, I (1991), "The knowledge creating company,” Harvard Business Review, 69 (6), 96104 Shibata, T. (2006). Japan, Moving Toward a More Advanced Knowledge Economy, 2 Advanced Knowledge Creating Companies. Washington, World Bank. Shibata, T., and Takeuchi, H. (2006). Advanced knowledge-creating companies. Washington, DC, World Bank. Tsai, H.-L. (2003). Information technology and business process reengineering: new perspectives and strategies. Westport (Conn.), Praeger. Wallace, D. P. (2007). Knowledge management: historical and cross-disciplinary themes. Westport, Conn, Libraries Unlimited. Read More