IE 780 Advanced Topics in MIS From Information Processing to Knowledge Creation: A Paradigm Shift in Business Management POSMIS Sungjin Kim POSMIS Sungjin Kim Ikujiro Nonaka, Katsuhiro Umemoto and Dai Senoo, Technology In Society, Vol. 18, No. 2 pp. 203~218, 1996

Postech Strategic Management of Information Systems Laboratory Contents  Introduction  The process of organizational knowledge creation  Four types of knowledge conversion Socialization Externalization Combination Internalization  The knowledge spiral  IT and the five enabling conditions for organizational knowledge creation  IT and the five-phase model of organizational knowledge creation  Conclusion

Postech Strategic Management of Information Systems Laboratory Introduction  Importance of knowledge Alvin Toffler, Peter Drucker, James Quinn, etc.  “Knowledge Society”  Western authors Didn’t examine how business organizations create new knowledge Knowledge Essentially given Already exists within the organization Can be learned or acquired from outside  Ikusiro Nonaka Building a model of how business firms create information “Organizational knowledge creation” Examine “How Information Technology (IT) can help implement the concept of the knowledge-creating company” Propose as the management paradigm for the emerging “knowledge society”

Postech Strategic Management of Information Systems Laboratory The process of organizational knowledge creation (1/3)  Knowledge Western “Justified true belief” Fails to include physical skills or embodied knowledge Authors “A meaningful set of information that constitutes a justified true belief and/or embodying a technical skill through practice”  Knowledge creation “A dynamic human process of justifying a personal belief toward the truth and/or embodying a technical skill through practice”  Two types of knowledge Tacit knowledge Intuitions Unarticulated mental models Embodied technical skills Explicit knowledge A meaningful set of information articulated in clear language including numbers or diagrams Knowledge

Postech Strategic Management of Information Systems Laboratory The process of organizational knowledge creation (2/3)  Japanese tend to consider knowledge as primarily “tacit” i.e. personal, context-specific, and not so easy to communicate to others  Western tend to consider knowledge as “explicit” i.e. formal, objective, and not so difficult to process with computers  New organizational knowledge Created by human interactions among individuals with different types (tacit or explicit) and different contents of knowledge  Knowledge conversion Socialization: individual tacit knowledge  group tacit knowledge Externalization: tacit knowledge  explicit knowledge Combination: from separate explicit knowledge  systemic explicit knowledge Internalization: explicit knowledge  tacit knowledge

Postech Strategic Management of Information Systems Laboratory The process of organizational knowledge creation (3/3) SocializationExternalization InternalizationCombination Tacit knowledge Tacit knowledge Tacit knowledge Explicit knowledge Explicit knowledge Explicit knowledge

Postech Strategic Management of Information Systems Laboratory Socialization  Socialization A process of creating common tacit knowledge through shared experiences Need to build a “field” of interaction Individuals share experiences at the same time and space Creating common unarticulated beliefs of embodied skills  Two dimensions of tacit knowledge Technical dimension Traditional apprenticeship: observation, imitation, practice, etc. Cognitive dimension Informal meetings outside the workplace  creating common tacit knowledge, mutual trust  IT is not useful in this mode Only face-to-face interaction

Postech Strategic Management of Information Systems Laboratory Externalization  Externalization A process of articulating tacit knowledge into such explicit knowledge as concepts and/or diagrams, often using metaphors, analogies, and/or sketches Groupware: supporting the creation of new knowledge “Colab”: a computer-supported conference system Bordnoter: electronic blackboard Cognoter: brainstorming, organizing and evaluating information Argnoter: presenting, arguing, and evaluating ideas

Postech Strategic Management of Information Systems Laboratory Combination  Combination A process of assembling new and existing explicit knowledge into a systemic knowledge such as a set of specifications for a prototype of new product Newly-created concept Should be combined with existing explicit knowledge to materialize it into something tangible Thus, “combination” start with linking different bodies of explicit knowledge “breakdown” e.g. one for a corporate vision descended from top management Creating deductively a systemic, explicit knowledge “mother concept”: which is created by organizational leader Gives birth to many “offspring concepts” IT comes into full play The greater part of knowledge and information in Combination is explicit and easy to process with IT

Postech Strategic Management of Information Systems Laboratory Internalization  Internalization Embodying explicit knowledge into tacit, operational knowledge such as know-how Learning by doing or using Manuals are widely used Engineering case studies help novice engineers to internalize explicit knowledge Increasingly adopted training with computer simulation Instead of OJT (on the job training) and reading manuals

Postech Strategic Management of Information Systems Laboratory The knowledge spiral (1/2)  Organizational knowledge is created through a “Knowledge Spiral” across four modes of knowledge conversion

Postech Strategic Management of Information Systems Laboratory The knowledge spiral (2/2)  Knowledge spiral across the levels of knowledge-creating entities such as individuals, groups, an organization, and collaborating organizations

Postech Strategic Management of Information Systems Laboratory IT and the five enabling conditions for organizational knowledge creation (1/4) 1.Organizational intention The knowledge spiral is driven by organizational intention Organization’s aspiration to its goals “Knowledge vision”, “Knowledge domain”, corporate standards Most important justification criterion for judging the truthfulness and relevance of a new piece of knowledge convenient tool to disseminate top management’s messages 2.Individual and group autonomy Autonomy Increasing the chances of finding valuable information and motivating organizational members to create new knowledge The whole and each part share the same information Have greater flexibility in acquiring, interpreting, and relating information

Postech Strategic Management of Information Systems Laboratory IT and the five enabling conditions for organizational knowledge creation (2/4) 3.Fluctuation/creative chaos Fluctuation Not a disorder but a change that is hard to predict Market needs, growth of competing companies, and challenges given by top management Breakdown Chance to reconsider their basic perspectives and a sense of crisis that urges them to have dialogues with people within as well as outside the organization Thereby creating new knowledge such as novel understandings of new circumstances and revolutionary corporate visions Necessary to monitor the environment and to communicate with outside organizations

Postech Strategic Management of Information Systems Laboratory IT and the five enabling conditions for organizational knowledge creation (3/4) 4.Informational redundancy Harm due to unnecessary duplication, waste, or information overload to western managers Redundancy to authors The existence of information that goes beyond the immediate operational requirements of organizational members Intentional overlapping of information about business activities, management responsibilities, and the company as a whole Informational redundancy promotes organizational knowledge creation in two ways Facilitating the sharing of tacit knowledge Individuals can sense what others are trying to articulate and invade each other’s functional boundaries to provide pieces of advice or information from different perspectives Helping loosely-connected individuals understand where they stand in the organization and control their directions of thinking and action

Postech Strategic Management of Information Systems Laboratory IT and the five enabling conditions for organizational knowledge creation (4/4) 5.Requisite variety Organizations can cope with many contingencies if it has “requisite variety” or minimax internal diversity Two major approaches to realize requisite variety Flattening of organizational structure and the building of a corporate-wide IS  give organizational members fast access to variety of information Changing the organizational structure frequently and rotating personnel frequently  enabling employees to acquire interdisciplinary knowledge to cope with the complexity of environmental fluctuations and internal problems

Postech Strategic Management of Information Systems Laboratory IT and the five-phase model of organizational knowledge creation

Postech Strategic Management of Information Systems Laboratory Conclusion  Davenport wrote: “The lesson from reengineering is a reminder of an old truth: IT is only useful if it helps people do work better and differently  Organizations should fuse synergistically IT as knowledge-creation tools and human beings with collaborative knowledge-creation capabilities to become a “knowledge-creating company”