Knowledge Conversion

1. Knowledge Conversion Rev: Feb, 2012 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management EngineeringPOSTECH

2. Contents

3. Discussion Questions • What are the two types of knowledge? Give more than one example for each type. • Briefly explain the four modes of knowledge conversion in the organizational knowledge creation process. Which do you think the most important? Why? • In which of the four modes of knowledge conversion does IT come into full play? Give an example ofthe use of IT in that mode. • What are the five enabling conditions for organizational knowledge creation? Which do you think the most important? Why? • Explain the process that fluctuation becomes new knowledge. • Briefly explain each phase of the five phase model of organizational knowledge creation.

4. 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

5. 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 Knowledge-Creating Company Tacit Knowledge Knowledge available to others

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

7. 2. Organizational Knowledge CreationProcess Socialization • 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 sensesand psychoemotional reactions • Other communication medium • Video conferences • Future: “virtual reality” or “virtual conferences”

8. 2. Organizational Knowledge CreationProcess Externalization (1/2) Current-generation groupware Construction of knowledge-bases & utilization of existing explicit knowledge Recent groupware development Support for the creation ofnew knowledge IBM Lotus Note • 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)

9. 2. Organizational Knowledge CreationProcess Externalization (2/2) Colab KJ method • Colab • A computer-supported conference systemby 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, picturesfrom 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”

10. 2. Organizational Knowledge CreationProcess Combination Think Tank CALS • 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

11. 2. Organizational Knowledge CreationProcess Internalization Reducing Time & Cost OJT + reading manuals Computer Simulation • 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

12. 2. Organizational Knowledge CreationProcess The Knowledge Spiral Dialogue Socialization Externalization LinkingExplicitKnowledge Field Building Internalization Combination Learning by doing Sympathized knowledge Conceptual knowledge Systemic knowledge Operationalknowledge • The Knowledge Spiral (epistemological dimension) • Usually begins from socialization

13. 2. Organizational Knowledge CreationProcess The Knowledge Spiral • 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

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

15. 3. Five Conditions ForOrganizational Knowledge Creation Organizational Intention • 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 criterionevaluating 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

16. 3. Five Conditions ForOrganizational Knowledge Creation Individual and Group Autonomy An autonomous individual is likethe core of Russian dolls Enhancinggroup autonomy Large scale of corporate-wideknowledge-bases Realinformation-sharing Breaking functional departments’ information monopolies • 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 informationMore 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

17. 3. Five Conditions ForOrganizational Knowledge Creation Fluctuation / Creative Chaos Fluctuation Breakdown Reconsideration&Dialogues New knowledge • Routines,habits,cognitive frameworks • Ensuingchaotic situation • Reconsider basic perspectives • A sense of crisis urging to have dialogues with people within/outside ofthe organization • Novel understandings of new circumstances • Revolutionary corporate visions CompuServe • 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

18. 3. Five Conditions ForOrganizational Knowledge Creation Informational Redundancy • 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

19. 3. Five Conditions ForOrganizational Knowledge Creation Requisite Variety • 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 knowledgeto 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

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

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

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

23. 4. Five-phase Model ofOrganizational Knowledge Creation Five-phase Model Of Organizational Knowledge Creation Enabling conditions Intention Autonomy Fluctuation / Creative chaos Redundancy Requisite variety Tacit knowledgeinorganization Explicit knowledgeinorganization Externalization Combination Socialization Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- leveling knowledge Internalization • Justify trustfulness • Decide forthe further work • “knowledge vision” Market Internalization by users Fromcollaborating organizations Explicit knowledge as advertisements, patents, product and/or service Tacit knowledge from users • Five-phase Model of Organizational Knowledge Creation

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

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

26. Case Study 5. Case Study

27. 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 – Fifteenth Edition”, McGraw – Hill, Chapter 2, pp. 43~71