14. Knowledge Conversion Rev: Feb, 2013 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management Engineering POSTECH

Contents 1 Introduction of Knowledge Creating Company 2 Organizational Knowledge Creation Process 3 Five Conditions for Organizational Knowledge Creation 4 Five-phase Model of Organizational Knowledge Creation 5 Case Study

Knowledge Creating Company 1. Introduction of Knowledge Creating Company Management paradigm for the emerging knowledge society Knowledge-creating company or learning organization Consistently creates new business knowledge Disseminates it throughout the company Builds it into its products and services

Knowledge available to others Knowledge-Creating Company Two Kinds of Knowledge 1. Introduction of Knowledge Creating Company Explicit Knowledge Data, documents, and things written down or stored in computers A meaningful set of information articulated in clear language including numbers or diagrams Textbooks Manuals Video lectures Tacit Knowledge The “how to” knowledge in workers’ minds Represents some of the most important information within an organization Intuitions Unarticulated mental models Embodied technical skills Tacit Knowledge Knowledge available to others Knowledge-Creating Company

Process of Organizational Knowledge Creation 2. Organizational Knowledge Creation Process 4 modes of knowledge conversion Socialization: individual tacit knowledge  group tacit knowledge Externalization: tacit knowledge  explicit knowledge Combination: separate explicit knowledge  systemic explicit knowledge Internalization: explicit knowledge  tacit knowledge Tacit knowledge Tacit knowledge Explicit Explicit knowledge Socialization Externalization Internalization Combination

Socialization Socialization Little Use of IT 2. Organizational Knowledge Creation Process Socialization A process of creating common tacit knowledge through shared experiences Required to build a “field” of interaction  creating common unarticulated beliefs or embodied skills Little Use of IT Only face-to-face interaction can capture the full range of physical senses and psychoemotional reactions Other communication medium Video conferences Future: “virtual reality” or “virtual conferences”

Support for the creation of new knowledge Externalization (1/2) 2. Organizational Knowledge Creation Process Externalization A process of articulating tacit knowledge into such explicit knowledge as concepts and/or diagrams, using metaphors, analogies, and/or sketches Triggered by a dialogue intended to create concepts from tacit knowledge e.g. Creating a new product concept Efforts to develop groupware for computer-supported cooperative work (CSCW) Current-generation groupware Construction of knowledge-bases & utilization of existing explicit knowledge Recent groupware development Support for the creation of new knowledge IBM Lotus Note

Externalization (2/2) Colab KJ method 2. Organizational Knowledge Creation Process Colab A computer-supported conference system by Xerox’s Palo Alto Research Center (PARC) “Bordnoter”: an electronic blackboard “Cognoter”: brainstorming, organizing, evaluating information “Argnoter”: presenting, arguing, and evaluating ideas Design principle: information sharing, “WYSIWIS” (What you see is what I see) KJ method Card-based knowledge-creation technique Brainstorming, evaluating, organizing information Computerization of the KJ method Prototype example: workstation-based GrIPS by Fujitsu Divergent thinking phase: pick up data such as key words, phrases, pictures from Keyword Associater/Picture Library  put into “cards” on the “Shared Board” Convergent thinking phase: Using “Card Editor”, organize the cards into pieces of information, related into a diagram using “D-ABDUCTOR” Communicate through “Miniature meeting Room” Colab KJ method

Combination Combination Full play of IT 2. Organizational Knowledge Creation Process Combination A process of assembling new and existing explicit knowledge into a systemic knowledge A newly-created concept should be combined with existing explicit knowledge Starting with linking different bodies of explicit knowledge “Breakdown”: creating deductively a systemic, explicit knowledge Mother concept Thought-provoking and fertile concept Gives birth to “offspring concepts” Goal: building an archetype Full play of IT “outline processor” Helps write a logical document Divides a theme into several sub-topics and arranges them Groupware for collaborative document production “ForComment” “Quilt” Workflow management software CALS (Commerce At Light Speed) IT for combining explicit knowledge at the inter-organizational level Think Tank CALS

Internalization Internalization 2. Organizational Knowledge Creation Process Internalization A process of embodying explicit knowledge into tacit, operational knowledge Triggered by “learning by doing or using” Internalization facilitated by Explicit knowledge Manuals, quintessential explicit knowledge Engineering case studies from veteran engineers’ experiences Change in Training workforce Japanese supermarket chain CD-ROM: how to use a POS register, how to process cash/card payments, how to talk to customers “Just-in-Time Training”: new services, new products, new telemarketing techniques Reducing Time & Cost OJT + reading manuals Computer Simulation

Sympathized knowledge Operational knowledge The Knowledge Spiral 2. Organizational Knowledge Creation Process The Knowledge Spiral (epistemological dimension) Usually begins from socialization Linking Explicit Knowledge Field Building Dialogue Learning by doing Socialization Externalization Internalization Combination Sympathized knowledge Conceptual knowledge Systemic knowledge Operational knowledge

The Knowledge Spiral The Knowledge Spiral (Ontological dimension) 2. Organizational Knowledge Creation Process The Knowledge Spiral (Ontological dimension) Individuals, groups, an organization, collaborating organizations Individuals’ tacit knowledge: basis of organizational knowledge creation Organization: individual level tacit knowledge  upper ontological level At the same time, organizational knowledge is utilized and internalized at the lower levels

Five Conditions For Organizational Knowledge Creation Organizational Intention Individual and Group Autonomy Fluctuation / Creative Chaos Informational Redundancy Requisite Variety Organizational Knowledge Creation

Organizational Intention 3. Five Conditions For Organizational Knowledge Creation Organizational Intention An organization’s aspiration to its goals A driving force of the knowledge spiral “knowledge vision”, “knowledge domain”, corporate standards The most important justification criterion evaluating the truthfulness and relevance of a new piece of knowledge E-mail A convenient tool to share the organizational intention Broadcasting function Storage function Important messages from the top should be never missed  “Information Lens”: categorizing e-mail messages and select only important ones Multimedia-mail

Individual and Group Autonomy 3. Five Conditions For Organizational Knowledge Creation Individual and Group Autonomy Autonomy increases the chances of Finding valuable information Motivating organizational members to create new knowledge An autonomous individual  a part of an organization with a holographic structure where whole and each part share the same information More flexibility in acquiring, interpreting, and relating information End-user and mobile computing End-user computing: the norm for any business organization User-friendly and low priced personal computers Corporate-wide information systems including computer networks, large knowledge-bases, and consulting systems High rate of computer literacy An autonomous individual is like the core of Russian dolls Enhancing group autonomy Large scale of corporate-wide knowledge-bases Real information-sharing Breaking functional departments’ information monopolies

Fluctuation / Creative Chaos 3. Five Conditions For Organizational Knowledge Creation Fluctuation Not a disorder but a change that is hard to predict Changes in market needs, growth of competing companies, and challenges given by top management Creative Chaos Monitoring the environment & Communicating with outside organizations Necessary to make intentional use of fluctuations from outside Internet, commercial on-line information services, specialized commercial databases E-mail Video conference system, in-house TV network connecting multiple sites, big-screen & high-definition displays Fluctuation Breakdown Reconsideration & Dialogues New knowledge Routines, habits, cognitive frameworks Ensuing chaotic situation Reconsider basic perspectives A sense of crisis urging to have dialogues with people within/outside of the organization Novel understandings of new circumstances Revolutionary corporate visions CompuServe

Informational Redundancy 3. Five Conditions For Organizational Knowledge Creation Redundancy Existence of information beyond the immediate operational requirements of members Intentional overlapping of information Promoting organizational knowledge creation in two ways: Facilitating the sharing of tacit knowledge Helping loosely-connected individuals understand their place in the organization & Controlling their directions of thinking and action  a self-control mechanism Shortcomings Increase of the amount of information to be processed  problem of information overload Increase of the cost of knowledge creation (at least in the short run) Balance between creation and processing of information Make clear where information can be located and knowledge is stored within the organization Large knowledge-bases using a powerful super-parallel computer E-mail

Requisite Variety Minimax internal diversity 3. Five Conditions For Organizational Knowledge Creation Minimax internal diversity Minimum for organizational integration & maximum for effective adaptation to environmental changes Ability to cope with many contingencies Two approaches to realize requisite variety Flattening organizational structure & Building corporate-wide information system Fast and equal access to the broadest variety of information for organizational members Relating information in different, flexible, and quick manners Reducing internal diversity by homogenizing members’ viewpoints Frequent change of the organizational structure and/or frequent personnel rotation Making employees acquire interdisciplinary knowledge to cope with the complexity of environmental fluctuations and internal problems Organizational knowledge accumulation and utilization problems Solved by large-scale knowledge-bases The daily building of companywide knowledge-bases groupware Reducing the proprietary aspect of information and knowledge Making it easier to take over others’ duties

Five-phase Model Of Organizational Knowledge Creation Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge From collaborating organizations Internalization by users from users Market Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge Socialization Externalization Combination Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Internalization Tacit knowledge in organization Explicit knowledge in organization

Five-phase Model Of Organizational Knowledge Creation Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge From collaborating organizations Internalization by users from users Market Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge Socialization Externalization Combination Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Internalization Tacit knowledge in organization Explicit knowledge in organization Direct experience Not inherently conducive to IT Video technology

Five-phase Model Of Organizational Knowledge Creation Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge From collaborating organizations Internalization by users from users Market Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge Socialization Externalization Combination Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Internalization Tacit knowledge in organization Explicit knowledge in organization Metaphor, analogies, and/or sketches Groupware IT plays key role

Five-phase Model Of Organizational Knowledge Creation Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge From collaborating organizations Internalization by users from users Market Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge Socialization Externalization Combination Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Internalization Tacit knowledge in organization Explicit knowledge in organization Justify trustfulness Decide for the further work “knowledge vision”

Five-phase Model Of Organizational Knowledge Creation Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge From collaborating organizations Internalization by users from users Market Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge Socialization Externalization Combination Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Internalization Tacit knowledge in organization Explicit knowledge in organization Materialize concepts into “archetypes” “virtual prototyping” “visual modeling”

Five-phase Model Of Organizational Knowledge Creation Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge From collaborating organizations Internalization by users from users Market Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge Socialization Externalization Combination Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Internalization Tacit knowledge in organization Explicit knowledge in organization Iterative and spiral process of Organizational knowledge creation

Reference Ikujiro Nonaka, “From Information Processing to Knowledge Creation: A Paradigm Shift in Business Management”, Technology In Society, Vol 18, No.2, pp. 203-218 O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 2