Dr. Mario's 2nd 🧠

đź“– The Knowledge-Creating Company

19 min read

Why did I want to read it?

I think I saw it referenced by Victoriano Izquierdo and the title resonated with me a lot. I do think companies are knowledge-creating systems (while at the same time, they don’t really put much emphasis in managing knowledge effectively).

What did I get out of it? Raw highlights

Drucker (1993) argues in his latest book that in the new economy, knowledge is not just another resource alongside the traditional factors of production-labor, capital, and land-but the only meaningful resource today. (Location 139)

Western observers tend not to address the issue of organizational knowledge creation. They take for granted a view of the organization as a machine for “information processing.” (Location 156)

Reminds me of a similar concept in Antifragile:

Japanese companies, however, have a very different understanding of knowledge. They recognize that the knowledge expressed in words and numbers represents only the tip of the iceberg. They view knowledge as being primarily “tacit”-something not easily visible and expressible. Tacit knowledge is highly personal and hard to formalize, making it difficult to communicate or to share with others. Subjective insights, intuitions, and hunches fall into this category of knowledge. Furthermore, tacit knowledge is deeply rooted in an individual’s action and experience, as well as in the ideals, values, or emotions he or she embraces. (Location 162)

For tacit knowledge to be communicated and shared within the organization, it has to be converted into words or numbers that anyone can understand. It is precisely during the time this conversion takes place-from tacit to explicit, and, as we shall see, back again into tacit-that organizational knowledge is created. (Location 172)

Senge goes a step further and says that trial-and-error learning is a delusion, since the most critical decisions made in an organization have systemwide consequences stretching over years and decades, a time frame that makes learning from direct experience an impossibility. (Location 193)

Having an insight or a hunch that is highly personal is of little value to the company unless the individual can convert it into explicit knowledge, thus allowing it to be shared with others in the company. (Location 210)

use figurative language to articulate their intuitions and insights. (Location 233)

the building of a redundant organization plays an important role in management of the knowledge-creation process. 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. (Location 253)

Western philosophy there has long been a tradition separating the subject who knows from the object that is known. This tradition was given a solid methodological basis by Descartes, who posited the “Cartesian split” between subject (the knower) and object (the known), (Location 342)

Western epistemology. Here again we encounter two opposing yet complementary traditions. One is “rationalism,” which essentially says that knowledge can be obtained deductively by reasoning. The other is “empiricism,” which essentially says that knowledge can be attained inductively from sensory experiences. (Location 349)

philosophers in the eighteenth and nineteenth centuries such as Kant, Hegel, and Marx attempted to synthesize the two traditions. Then we will briefly examine some twentieth-century attempts to overcome the Cartesian split. (Location 352)

Western philosophers have generally agreed that knowledge is “justified true belief,” a concept that was first introduced by Plato in his Meno, Phaedo, and Theaetetus.2 (Location 355)

This could be said of data and data quality:

our belief in the truth of something does not constitute our true knowledge of it, so long as there is a chance, however slight, that our belief is mistaken. Therefore, the pursuit of knowledge in Western philosophy is heavily laden with skepticism, (Location 356)

In Locke’s view, (Location 394)

He argued that only experience can provide the mind with ideas and that there are two kinds of experience: sensation and reflection. By sensation Locke meant the sensory perception, which is the “great source of most of our ideas,” and by reflection “the perception of the operation of our own mind within us,” which is “the other fountain from which experience furnisheth the understanding with ideas."" (Location 396)

three distinctions of the Japanese intellectual tradition: (1) oneness of humanity and nature; (2) oneness of body and mind; and (3) oneness of self and other. (Location 447)

the Japanese language is characterized by visual concepts that are highly context-specific in terms of both time and space. (Location 460)

The Japanese see time as a continuous flow of a permanently updated “present.” (Location 461)

Being a “man of action” was considered more important than mastering philosophy and literature, although these subjects constituted a major part of the samurai’s intellectual education.25 (Location 478)

In the Japanese language, a message is often communicated through the use of context, not solely by the self-complete grammatical code. (Location 503)

To be an independent individual and to respect others is such a difficult concept for the Japanese that they sometimes misunderstand the Western notion of “public.” (Location 509)

neoclassical economists neglected a huge amount of both tacit and explicit knowledge held by economic subjects that is not represented in the form of price information. They were not concerned with the creation of knowledge and did not position the firm as a knowledge creator. (Location 530)

Hayek posited that the function of the price mechanism is to communicate information and that the market is the process through which individual knowledge is mobilized socially. (Location 539)

Schumpeter, “Capitalism … is by nature a form or method of economic change and not only never is but never can be stationary” (1952, p. 82) and the fundamental impulse of capitalism development is “new combinations” (1951, p. 66). Schumpeter emphasized the importance of combining explicit knowledge. In fact, he pointed out that the emergence of new products, production methods, markets, materials, and organizations resulted from new “combinations” of knowledge. However, “combination” is only one mode of knowledge creation, (Location 543)

Although Penrose pointed out the importance of experience and knowledge accumulated within the firm, she did not elaborate on the organizational mechanism or the process through which members of a firm can accumulate knowledge. (Location 552)

According to Nelson and Winter, such knowledge is stored as “regular and predictable behavioral patterns” of business firms, or what they called “routines” and equated with “genes.” Innovation is an inherently unpredictable “mutation” of routines (Location 556)

On the one hand is the “scientific” line, from Taylor to Simon to contemporary preoccupation with the “scientification” of strategy. On the other hand is the “humanistic” line, from Mayo to Weick to recent attention to “organizational culture.” In fact, the century-long history of management studies can be seen as a series of controversies between the two camps and unsuccessful attempts at a synthesis between them (Location 564)

In the 1920s and 1930s, a group of management scholars at Harvard University, headed by George Elton Mayo, conducted a series of experiments at the Hawthorn plant of Western Electric. The so-called “Hawthorn experiments” showed that social factors such as morale, a “sense of belonging” to a work group, and interpersonal skills to understand human (especially group) behavior improved productivity (Location 572)

raising productivity through the continuous improvement of practical knowledge held by workers on the shop floor. (Location 578)

The task Simon undertook in Administrative Behavior (1945) and Organizations (1958) (coauthored with J. March) was to build a scientific theory of problem solving and decision making based on the assumption that human cognitive capacity is inherently limited. (Location 598)

Simon (1973) concluded that an organization facing a complex environment should design itself in a way that minimizes the need for information distribution among its units, in order to reduce the information load on them. (Location 604)

An organizational knowledge base could hardly emerge because of the difficulty of establishing links among the knowledge produced by different individuals. (Location 624)

Jeffrey Pfeffer (1981), on the other hand, stressed the importance of beliefs. He considered organizations as “systems of shared meanings and beliefs, in which a critical administrative activity involves the construction and maintenance of belief systems which assure continued compliance, commitment, and positive effect on the part of participants” (p. 1). Thus, organizational culture can be seen as consisting of beliefs and knowledge shared by members of the organization. (Location 664)

According to the leading management thinkers, the manufacturing, service, and information sectors will be based on knowledge in the coming age, and business organizations will evolve into knowledge creators in many ways.Peter Drucker is one of the earliest thinkers who noticed a sign of this great transformation. He coined the terms “knowledge work” or “knowledge worker” around 1960 (Location 677)

I wonder if data really helps here or we are talking about a much macro feedback loop

build systematic practices for managing a self-transformation. The organization has to be prepared to abandon knowledge that has become obsolete and learn to create new things (Location 681)

Senge (1990) recognized that many organizations suffer from “learning disabilities.” (Location 696)

(1) adopt “systems thinking”; (2) encourage “personal mastery” of their own lives; (3) bring prevailing “mental models” to the surface and challenge them; (4) build “a shared vision”; and (5) facilitate “team learning.” (Location 698)

I imagine it happens the same regarding individuals and skills.

Competition is now a “war of movement” in which success depends on anticipation of market trends and quick response to changing customer needs. Successful competitors move quickly in and out of products, markets, and sometimes even entire businesses-a process more akin to an interactive video game than to chess. (Location 727)

This happens with a data team too

The organization that wishes to cope dynamically with the changing environment needs to be one that creates information and knowledge, not merely processes them efficiently. (Location 774)

New highlights added 2024-01-04

The cornerstone of our epistemology is the distinction between tacit and explicit knowledge. As we will see in this chapter, the key to knowledge creation lies in the mobilization and conversion of tacit knowledge. (Location 873)

A spiral emerges when the interaction between tacit and explicit knowledge is elevated dynamically from a lower ontological level to higher levels. (Location 877)

These four modes-which we refer to as socialization, externalization, combination, and internalization-constitute the “engine” of the entire knowledge-creation process. (Location 879)

Super relevant for Data Analysis

we first turn to describing how knowledge is similar to and different from information. Three observations become apparent in this section. First, knowledge, unlike information, is about beliefs and commitment. Knowledge is a function of a particular stance, perspective, or intention. Second, knowledge, unlike information, is about action. It is always knowledge “to some end.” And third, knowledge, like information, is about meaning. It is context-specific and relational. (Location 882)

✍️ Ser data-driven no es de guapas ✍️ Ser data-driven no es de guapas

While traditional epistemology emphasizes the absolute, static, and nonhuman nature of knowledge, typically expressed in propositions and formal logic, we consider knowledge as a dynamic human process of justifying personal belief toward the “truth.” (Location 887)

Polanyi contends that human beings acquire knowledge by actively creating and organizing their own experiences. Thus, knowledge that can be expressed in words and numbers represents only the tip of the iceberg of the entire body of knowledge. As Polanyi (1966) puts it, “We can know more than we can tell” (p. 4).4 (Location 913)

human knowledge is created and expanded through social interaction between tacit knowledge and explicit knowledge. We call this interaction “knowledge conversion.” It should be noted that this conversion is a “social” process between individuals and not confined within an individual.’ (Location 933)

They are as follows: (1) from tacit knowledge to tacit knowledge, which we call socialization; (2) from tacit knowledge to explicit knowledge, or externalization; (3) from explicit knowledge to explicit knowledge, or combination; and (4) from explicit knowledge to tacit knowledge, or internalization.’ (Location 943)

Almost the only one considered by Extreme Programming

Socialization is a process of sharing experiences and thereby creating tacit knowledge such as shared mental models and technical skills.11 (Location 948)

How can we convert tacit knowledge into explicit knowledge effectively and efficiently? The answer lies in a sequential use of metaphor, analogy, and model. (Location 1002)

metaphor is an important tool for creating a network of new concepts. Because a metaphor is “two thoughts of different things … supported by a single word, or phrase, whose meaning is a resultant of their interaction” (Richards, 1936, p. 93), (Location 1012)

Middle management plays a critical role in creating new concepts through networking of codified information and knowledge. (Location 1025)

Documentation helps individuals internalize what they experienced, thus enriching their tacit knowledge. (Location 1045)

The most critical element of corporate strategy is to conceptualize a vision about what kind of knowledge should be developed and to operationalize it into a management system for implementation. (Location 1100)

If not for intention, it would be impossible to judge the value of information or knowledge perceived or created. (Location 1111)

Everyone should run all the way from start to finish. Like rugby, all of us should run together, pass the ball left and right, and reach the goal as a united body.23 (Location 1146)

Fluctuation is different from complete disorder and characterized by “order without recursiveness.” It is an order whose pattern is hard to predict at the beginning (Gleick, 1987). (Location 1150)

Chaos (Location 1159)

can also be generated intentionally when the organization’s leaders try to evoke a “sense of crisis” among organizational members by proposing challenging goals. Ryuzaburo Kaku, chairman of Canon, often says, “The role of top management is to give employees a sense of crisis as well as a lofty ideal” (Nonaka, 1985, p. 142). This intentional chaos, which is referred to as “creative chaos,” increases tension within the organization and focuses the attention of organizational members on defining the problem and resolving the crisis situation. (Location 1160)

Japanese companies often resort to the purposeful use of ambiguity and “creative chaos.” Top management often employs ambiguous visions (or so-called “strategic equivocality”) and intentionally creates a fluctuation within the organization. (Location 1165)

It should be noted that the benefits of “creative chaos” can only be realized when organizational members have the ability to reflect upon their actions. Without reflection, fluctuation tends to lead to “destructive” chaos. (Location 1167)

For organizational knowledge creation to take place, a concept createdby an individual or group needs to be shared by other individuals who may not need the concept immediately. (Location 1184)

Another way to build redundancy into the organization is through a “strategic rotation” (Location 1196)

One way to deal with the possible downside of redundancy is to make clear where information can be located and where knowledge is stored within the organization. (Location 1204)

When information differentials exist within the organization, organizational members cannot interact on equal terms, which hinders the search for different interpretations of new information. (Location 1209)

With knowledge being perishable, organizations cannot become complacent with today’s knowledge, as different types of knowledge will be required as the competitive environment changes. And as we have already seen, it is this ability to create new knowledge continuously that becomes the source of competitiveness in the knowledge society. (Location 1394)

The company’s strategic shift and the integration of the three divisions introduced a sense of crisis into the Cooking Appliances Division. The resulting creative chaos inspired individual intention and commitment throughout the division. (Location 1420)

OMG, great to meet the stakeholders

Sano, the division chief, noted, “If the craftsmen cannot explain their skills, then the engineers should become crafts- men.”5 (Location 1494)

Sooner or later, any organization ends up creating new knowledge. But in most organizations this process is haphazard, serendipitous, and therefore impossible to predict. What distinguishes the knowledge-creating company is that it systematically manages the knowledge-creation process. (Location 1740)

Akin to what is said in Team Topologies

the management process best suited to creating organizational knowledge is substantially different from the traditional managerial models with which most executives are familiar, namely the top-down and bottom-up management models. (Location 1742)

A bottom-up organization has a flat and horizontal shape. With hierarchy archy and division of labor eliminated, the organization might have only three or four layers of management between the top and the front line. Few orders and instructions are given by the top managers, who serve as sponsors of entrepreneurially minded front-line employees. Knowledge is created by these employees, who operate as independent and separate actors, preferring to work on their own. There is little direct dialogue with other members of the organization, either vertically cally or horizontally. Autonomy, not interaction, is the key operating principle. Certain individuals, not a group of individuals interacting with each other, create knowledge. These two traditional models may seem like alternatives to each other, but neither is adequate as a process for managing knowledge creation. (Location 1756)

Bottom-up, on the other hand, is good at dealing ing with tacit knowledge. But its very emphasis on autonomy means that such knowledge is extremely difficult to disseminate and share within the organization. (Location 1761)

team members articulate their own thinking, sometimes through the use of metaphors or analogies, revealing hidden tacit knowledge that is otherwise hard to communicate. This kind of intense interaction hardly takes place in the military-like hierarchy of the top-down model or among the autonomy-driven individuals of the bottom-up model.(Location 1765)

In the case of the bottom-up model, the preeminence and autonomy omy given to an individual make knowledge creation much more time-consuming, since the pace with which creation takes place is dependent dent on the patience and talent of the particular individual. (Location 1770)

In the West, where companies are laying off middle managers by the thousands, the very term “middle manager” has become almost a term of contempt, synonymous with “backwardness,” “stagnation,” and “resistance to change.” Yet we are arguing that middle managers are the key to continuous innovation. (Location 1781)

✍️ Déjame sin trabajo, por favor

Doomsayers argue, according cording to Borucki and Byosiere (1991), that the traditional role of middle managers as strategy implementers is disappearing as a result of new management philosophies and notions such as total employee involvement, the self-designing organization, and sociotechnical systems tems and autonomous work teams. These arguments give the impression sion that perhaps middle managers may be in the business of going out of business. (Location 1791)

front-line employees can become so caught up in their own narrow perspective that they lose sight of the broader context (Location 1799)

Middle managers do this by providing their subordinates with a conceptual framework that helps them make sense of their own experience. (Location 1802)

Ideally, knowledge practitioners should have the following qualifications: (1) they need to have high intellectual standards; (2) they need to have a strong sense of commitment to re-create the world according to their own perspective; (3) they need to have a wide variety of experiences, both inside and outside the company; (4) they need to be skilled in carrying on a dialogue with customers as well as with colleagues within the company; and (5) they need to be open to carrying out candid discussions as well as debates with others. (Location 2142)

A number of qualifications must be met for middle managers to become effective knowledge engineers: (1) they must be equipped with topnotch capabilities of project coordination and management; (2) they need to be skilled at coming up with hypotheses in order to create new concepts; (3) they need to have the ability to integrate various methodologies for knowledge creation; (4) they need the communication skills to encourage dialogue among team members; (5) they should be proficient at employing metaphors in order to help others generate and articulate imagination; (6) they should engender trust among team members; and (7) they should have the ability to envision the future course of action based on an understanding of the past. (Location 2171)

How unintuitive

an open-ended and equivocal vision, which is susceptible to a variety of interpretations, is preferable. A more equivocal vision gives members of the self-organizing team the freedom and autonomy to set their own goals, making them more committed to figuring out what the ideals of the top really mean. (Location 2187)

A senior or top manager should ideally have the following characteristics to qualify as a knowledge officer: (1) ability to articulate a knowledge vision in order to give a company’s knowledge-creating activities a sense of direction; (2) capability to communicate the vision, as well as the corporate culture on which it is based, to project team members; (3) capability to justify the quality of the created knowledge based on organizational criteria or standards; (4) uncanny talent for selecting the right project leader; (5) willingness to create chaos within the project team by, for example, setting inordinately challenging goals; (6) skillfulness in interacting (Location 2203)

with team members on a hands-on basis and soliciting commitment from them; and (7) capability to direct and manage the total process of organizational knowledge creation. (Location 2206)

The oscillation between bureaucracy and task force goes back to the nineteenth century, when Max Weber asserted that the most rational and efficient organizations in modern society have bureaucratic characteristics (Gerth and Mills, 1972, pp. 196-198).’ A bureaucratic structure works well when conditions are stable, since it emphasizes control and predictability of specific functions. (Location 2237)

When composed of many different small-scaled task forces, the organization becomes incapable of setting and achieving its goals or vision at the corporate level. (Location 2249)

the former is the more appropriate structure for the exploitation and accumulation of knowledge, while the latter is effective for the sharing and creation of knowledge. The business organization should pursue both the efficiency of a bureaucracyand the flexibility of a task-force organization; some combination or synthesis of the two is needed to provide a solid base for knowledge creation. (Location 2263)

New highlights added 2024-01-11

The goal is an organizational structure that views bureaucracy and the task force as complementary rather than mutually exclusive. The most appropriate metaphor for such a structure comes from a “hypertext,” which was originally developed in computer science.7 (Location 2315)

Multi-disciplinar teams

The top layer is the “project-team” layer, where multiple project teams engage in knowledge-creating activities such as new-product development. The team members are brought together from a number of different units across the business system, and are assigned exclusively to a project team until the project is completed. (Location 2329)

organizational knowledge generated in the above two layers is recategorized and recontextualized. (Location 2331)

it adds another layer, the knowledge base, that serves as a “clearinghouse” for the new knowledge generated in the business-system and the project-team layers. (Location 2350)

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