A running theme in the Irish media is the notion that we need to become a knowledge based economy in order to move up the value chain and attract foreign direct investment to Ireland. To be honest, ask the average punter out on the street what a knowledge based economy is and you would get a range of answers more diverse than a rainbow.

Yes we need to churn out more scientists and engineers out of universities, but more importantly we need a revolution in Irish workplaces. There’s the National Workplace Strategy, but that’s pitched so far above workers’ heads that it ranks as clouds on their agenda.

The fact of the matter is that is if we can’t improve simple processes in the office, then there is no hope for a knowledge based economy in Ireland. However this will require a change in attitudes in the workplace as employees input at all levels is required to identify tasks which can be streamlined or improved. What we should be focused on is creating knowledge based companies. What are those you may ask?

In his 1991 article for the Harvard Business Review, Ikujiro Nonaka popularized the notion of a knowledge creating company:

Deeply ingrained in the traditions of Western management…is a view of the organization as a machine for “information processing”…But there is another way to think about knowledge and its role in business organizations. It is found most commonly at highly successful Japanese competitors like Honda, Canon, Matsuhita, NEC, Sharp, and Kao. These companies have become famous for their ability to respond quickly to customers, create new markets, rapidly develop new products, and dominant emergent technologies. The secret to their success is their unique approach to managing the creation of new knowledge.

The centerpiece of the Japanese approach is the recognition that creating new knowledge is not simply a matter of “processing” objective information. Rather it depends on tapping the tacit and often highly subjective insights, intuitions, and hunches of individual employees and making those insights available for testing and use by the company as a whole.

New knowledge always begins with the individual. A brilliant researcher has an insight that leads to a new patent. A middle manager’s intuitive sense of market trends becomes the catalyst for an important new product concept. A shop-floor worker draws on years of experience to come up with a new process innovation. In each case, an individual’s personal knowledge is transformed into organizational knowledge valuable to the company as a whole.

Making personal knowledge available to others is the central activity of the knowledge-creating company. It takes place continuously and at all levels of the organization. And as the following example suggests, sometimes it can take unexpected forms.

In 1985, product developers at the Osaka-based Matsushita Electric Company were hard at work on a new home bread-making machine. But they were having trouble getting the machine to knead dough correctly. Despite their efforts, the crust of the bread was overcooked while the inside was hardly done at all. They even compared X-rays of dough kneaded by the machine and dough kneaded by professional bakers. But they were unable to obtain any meaningful data.

Finally software developer Ikuko Tanaka proposed a creative solution. The Osaka International Hotel had a reputation for making the best bread in Osaka. Why not use it as a model? Tanaka trained with the hotel’s head baker to study his kneading technique. She observed that the baker had a distinctive way of stretching the dough. After a year of trial and error, working closely with the project’s engineers, Tanaka came up with product speficiations…that successfully reproduced the baker’s technique and the quality of the bread she had learnt to make at the hotel. The result: Matsushita’s unique “twist dough” method and a product that in its first year set a record for sales of a new kitchen appliance.

Ikuko Tanaka’s innovation illustrates a movement between two very different types of knowledge. The end point of that movement is “explicit” knowledge: the product specifications for the bread-making machine. Explicit knowledge is formal and systematic. For this reason, it can be easily communicated and shared, in product specifications or a scientific formula or a computer progam.

But the starting point ot Tanaka’s innovation is another kind of knowledge that is not so easily expressabloe: “tacit” knowledge, like that possessed by the chief baker at the Osaka International Hotel. Tacit knowledge is highly personal. It is difficult to formalize and, therefore, difficult to communicate to others.

Articulation (converting tacit knowledge into explicit knowledge) and internalization (using that explicit knowledge to extend one’s tacit knowledge base) are the critical steps in this spiral of knowledge.

This sounds very high-falutin, but I think a good real-life example of this is the rapid adoption of social networks and how the current generation of digital natives are assimilated into the workforce.

It seems like every teenager in Ireland has a Bebo account. Social networking comes like second nature to these kids – whether it’s setting up accounts, embedding videos into their Flash Box or adding widgets to their page. This sounds like double-dutch to the average punter and most commentary about social networks in the media is about sexual predators hunting teens or time wasting in the office place. However if you take a step back and look at the complexity of social networks and how quickly they are being adopted, and quicker still how teens are mastering their individual features, then it strikes me that there is a real opportunity to translate this same innovation into the officeplace, particularly as this generation becomes assimilated into the workforce, as it can be seen that articulation and internalization are also critical steps in the adoption of social networks.

I was at an IIA presentation earlier this year where Richard Delevan, business editor of the Sunday Tribune, spoke about (mp3 link – Richard is the third speaker) how Irish companies can tap into new markets and develop better employees by embracing new media. I didn’t agree with everything that he said, but he points out that digital natives are growing up interacting with each other completely differently.

Irish companies need to embrace this new form of interaction as the critical steps of the knowledge creating company underpins it. Importantly, this doesn’t mean that to develop a knowledge based economy we need to all start corporate wikis. Collaborative based working tools are simply a tool of the knowledge creating company. We will only successfully develop a knowledge based economy by following the example of organisations like the Matsushita Electric Company.

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Piaras Kelly
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