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 / First Quarter 1997 / Issue 6(originally published by Booz & Company)


The Art and Practice of Japanese Management

The point about tacit knowledge is that it is always there: a company does not have to create it, but rather remove the barriers that surround it.

Consider how that is done at Kao, a chemicals and cosmetics company. For starters, Kao holds all of its meetings in the open, allowing anybody to drop in, and half the space on the executive floor is given over to a "decision-making room." Kao's quarterly R.&D. conference regularly attracts some 1,800 people (out of a work force of 7,000). The company also encourages customers to phone in with suggestions and complaints, and receives some 50,000 calls a year. And it set up a computer network that gives all employees, however lowly, access to all but the most sensitive personal information. Even the president's expense account is on public view.

One problem with implicit knowledge is that it is difficult to push across borders, even when people share the same language. Yet while Japanese companies have a fairly bad record at extracting ideas from their foreign subsidiaries, they have also been fairly capable teachers -- particularly when it comes to teaching tacit knowledge about manufacturing.

In places as far apart as Wales and Tennessee, local workers are using "Japanese" methods to produce Toyotas and Nissans for their domestic markets. And they have learned their lessons well, often giving plants in Japan a run for their money when it comes to quality and efficiency.

Reprint No. 97107

Illustrations by Keith Peters


(1) James Womack, Daniel Jones and Daniel Roos, "The Machine That Changed the World: The Story of Lean Production" (HarperCollins, 1990), p. 225.

(2) James Womack et al., op. cit.

(3) Kenichi Ohmae, "The Mind of the Strategist" (McGraw-Hill, 1982), p. 221.

(4) Carol Kennedy, "Managing With the Gurus" (Century Publishing Company, 1994), p. 222.

(5) James Womack et al., op. cit., p. 237.

(6) "Japan's New Identity," Business Week, April 10, 1995, p. 37.

(7) "On the Chin," Far Eastern Economic Review

(8) Tadahiro Sekimoto, "Corporate Challenges in the New Century," a paper prepared for the United Kingdom-Japan 2000 Group Conference, March 17-19, 1995, p. 3.

(9) Ikujiro Nonaka and Hirotaka Takeuchi, "The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation" (Oxford University Press, 1995), p. 115.

(10) Ibid.

John Micklethwait, [email protected]
John Micklethwait works for The Economist and is coauthor, with Adrian Wooldridge, of A Future Perfect: The Challenge and Hidden Promise of Globalization (Crown Business, 2000),

Adrian Wooldridge, [email protected]
Adrian Wooldridge works for The Economist and is coauthor, with John Micklethwait, of A Future Perfect: The Challenge and Hidden Promise of Globalization (Crown Business, 2000),
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