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 / Winter 2008 /Issue 53(originally published by Booz & Company)


The Practical Wisdom of Ikujiro Nonaka

As companies grow more skilled at knowledge creation, Nonaka sees them drawing customers, suppliers, competitors, education partners, and communities into these processes. At the same time, corporate leaders must decide how much autonomy to grant employees, balancing the need for flexibility with the need for control. Carroll Creech, former CEO of Snap-on Tools Japan, a division of the U.S. global manufacturer Snap-on Inc., understands this paradoxical challenge. “Nonaka-Sensei,” he says, “does not look at the constituent parts of an organization or the issues it faces as separate things. He sees an organization as a set of relationships that work together in ways that affect the whole. Having enough patience to not cut things short and say, ‘What’s the bottom line here?’ is essential if you want to compete in a global economy that demands constant innovation.”

Of course, not every company in Japan is a paragon of knowledge creation, as that country’s perennially troubled financial sector makes clear. But the examples Nonaka uses in Managing Flow and The Knowledge-Creating Company demonstrate what the Japanese are doing right. It’s as if his original desire for revenge on the West has been fulfilled, but in a way he could never have anticipated. Japan has become a sort of management conscience to the rest of the world, and through its best companies, an exemplar of superior achievement.

There’s a parallel here to the role information technology has played over the last four decades. IT began as an innovative paragon, became a flawed workhorse al­ways falling short of its potential, and emerged as a stra­tegic partner transforming the role of enterprise in the world. This history, like that of Japanese management practice, makes clear that the full measure of humanity must become manifest in the machine if knowledge is to be created; treating humans as interchangeable parts will always lead to a creative dead end. Nonaka’s great contribution has been to offer a vision for channeling creativity into innovation and a method for bringing it forth. In the end, the phronetic manager capable of integrating the analytical power of episteme with the poetry and technique of techne can achieve extraordinary results while helping to make the organization whole. 

Reprint No. 08407

Author Profile:

Sally Helgesen is an author and leadership de­velopment consultant. Her books include The Web of Inclusion: A New Architecture for Building Great Organi­zations (Currency/Doubleday, 1995) and Thriving in 24/7: Six Strategies for Taming the New World of Work (Free Press, 2001). Her Web site is
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  1. Aristotle, Nicomachean Ethics, translated by Terence Irwin (Hackett, 1999): Original source on phronesis and other concepts that Nonaka draws upon.
  2. Denise Caruso, “The Real Value of Intangibles,” s+b, Autumn 2008: The case for standards for appraising the worth of nonphysical assets like brands, human capital, and tacit knowledge.
  3. Kevin Dehoff and John Loehr, “Innovation Agility,” s+b, Summer 2007: Knowledge creation lies at the heart of Toyota’s groundbreaking product development process.
  4. Peter Drucker, Adventures of a Bystander (HarperCollins, 1991): Autobiography of the great management writer, with a chapter on the Polanyi family.
  5. Michael Farber, Tom Greenspon, and Jeffrey Tucker, “The Practical Visionary,” s+b, Spring 2008: The new role of the chief information officer may make it easier to implement knowledge management as a process centered in human conversation.
  6. Tim Laseter and Rob Cross, “The Craft of Connection,” s+b, Autumn 2006: Discusses how organizational network analysis is helping companies share knowledge worldwide, one natural broker at a time.
  7. Ikujiro Nonaka and Hirotaka Takeuchi, The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation (Oxford University Press, 1995): Nonaka’s first major inside look at knowledge creation, primarily at Japanese companies.
  8. Ikujiro Nonaka, Ryoko Toyama, and Toru Hirata, Managing Flow: A Process Theory of the Knowledge-Based Firm (Palgrave, 2008): In-depth theory of knowledge-based management with an emphasis on the practical wisdom called phronesis.
  9. Jeffrey Rothfeder, “Jeffrey Liker: The Thought Leader Interview,” s+b, Summer 2008: A lean process expert explains why companies without ba find it so hard to emulate Toyota.
  10. Ikujiro Nonaka’s Web site, Hitotsubashi ICS Business School: Includes a bibliography of Nonaka’s published work.
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