Gl balOrganization Knowledge Creation Summary of “The Knowledge-Creating Company”, Chapter 7 by Ikujiro Nonaka & Hirotaka Takeuchi Presenters: Dwi Arti Anugrah, Endro Catur Nugroho, Marlisa Kurniati, Tri Kuncoro Wati Faculty of Psychology, Universitas Indonesia, 2013 Information in this document is intended for academic purposes only.
What We Will Learn... For product development, the Japanese companies’approach to organizational knowledge creation (OKC) can be applied, with some adjustments, both in the context of overseas business development and global joint operation.
Reminder... Last presentations QuestionOKC by Japanese How OKC takes place on acompanies: global scale?1. Management process: 1. Can these OKCs work middle-up-down outside Japan? management 2. What adjustments2. Organizational structure: needed for partnership hypertext organization with non-Japanese counterparts outside Japan?
Organizational Knowledge CreationCompaniesWesternJapanese andCompanies Interaction between tacit and Emphasize on knowledge Enabling organizational condition explicit creation
OKC: Differences Between Japanese and Western Companies Japanese WesternInteraction between Group level Individual leveltacit and explicit (usually middle managers) (usually top leaders)Emphasize on Tacit knowledge Explicit knowledgeknowledge creation • intuition, figurative language and • paralysis by analysis bodily experience • oral and visual • quick internalization • groupthink • overadaptation to past successEnabling • Ambiguous organizational intentions • Clear organizational intentionorganizational • High redundancy of information and • Individual autonomycondition tasks • Creative chaos through individual • Frequent fluctuation from top differences management • Less fluctuation from top management • High autonomy at the group level • Less redundancy of information • High requisite variety through cross- • Requisite variety through individual functional project teams differences
Case Study: Nissan Primera ProjectWhat we learn: A new product development approach that combines the best of Japanese "rugby style" and European "relay style" for shorter lead time yet high performance cars.
Nissan Primera Project high performanceimage, image, plush, plush,options options Grand Concept
Nissan Primera Project$ $ $ 80 % Criteria* *by top management, first time in Nissan
Nissan Primera ProjectGrand Concept:Nissan Primera (1986): global car that fits to: • European market: high performance • US and Japan market: images, plushy and optionsCriteria:1. Be manufactured in Japan and Britain2. Have 80% of components made in Europe3. Be sold primarily in European market and additionally US and Japanese market(by top management, first time in Nissan)
Product Development1.Product Strategy Division: planning, design, testing, production and marketing2.Development Team: eight Japanese managers
Product Development Product Strategy Division Model 1 Model 2 Model 3 Planning Planning Planning Body design Chassis design Engine design Exterior design Interior design TestingProductionMarketing
Product Development1.Product Concept: • “Comfortable Functionality” -> "Sure, Fast, and Comfortable on the Autobahn" • Comfort 10 • 50-page catalog that included many sketches externalizing mental model or image of Primera
Product DevelopmentCommunicating the Gathering Informationproduct concept and in Europe: Europeanbuilding wider support: Liaison TechnologyAutobahn! Office
Product Development1.Communicating the Product Concept and Building Wider Support: Sending 1500 people to Europe to drive on the Autobahn and acquire tacit knowledge about European automobile market, motoring culture and road conditions2.Gathering Information in Europe: European Technology Liaison Office in Brussels was established
Nissan Primera Product Development• Develop 1/4 clay models and design review• Develop full scale clay model and interior review• Develop prototype and 180,000km test (exceeded the norm)• Develop interior and 800km test• Develop new engine and multilink suspension
Product DevelopmentDesigning Primera: to “outengineer” Benz andBMW (and lead the world)Process:• Develop 1/4 clay models and design review• Develop full scale clay model and interior review• Develop prototype and 180,000km test (exceeded the norm)• Develop interior and 800km test• Develop new engine and multilink suspensionForming the Yazaki Group: a group of selecteddevelopment engineers and skilled test drivers
Product Development Quality issues Cost ? design $$$$production
Product Development factory tacit knowledgeIssuesSolutionsResult suppliers factory
Product DevelopmentProduction people was directly involved in theearly stage of designPrimera production constraint:1. Quality of Japanese cars2. Cost-constraint (remember: mid-range)Issues, solutions and result:1. Production is in Japan and Britain (NMUK), (tacit) production knowledge is in Japan.2. British suppliers were not familiar to Nissan production.
Result and Implication Quantity Qualityexceeding target multiple award-winning
Result and ImplicationPrimera as Global Car 1. Annual production target in Europe (100,000) exceeded (124,000) 2. Annual production target in Japan (3,000) exceeded (6,260) 3. Winning 19 best car prizes throughout Europe
Result and Implication Socialization & Externalization !!! factory explicit knowledge tacitIssuesSolutionsResult suppliers factory
Result and ImplicationPrimera case emphasizes importance ofsocialization and externalization:1. Socialization of Europe market by sending Japanese engineers to Europe2. Externalization (in the form of manuals) and socialization of Japanese (tacit) car manufacturing knowledge by sending British engineers to Japan
Result and ImplicationNew product development approach:American football
Result and Implication CONCEPT CONCEPT CONCEPTNew product development approach:American football
Result and ImplicationNew product development approach: Americanfootball1. Rugby Style: shorten product development lead time (for even shorter than already short compared to European) by overlapping design and manufacturing cycle.2. Relay Style: phased production cycle.3. American football (the new style): combination of Rugby Style and Phase Style, which leads to short lead time and higher performance level
European and Japanese Style CONCEPT CONCEPT European Style Japanese StyleObjective Superior performance Adaptation to changing needsProduct Appeal Function Image and qualityProduct concept Clear cut decision at the initial stage, adhered to Vague at initial stage. Modified and alltered increation throughout the ensuing stages ensuing stages in accordance with change in needsFlow of activities Sequential approach Overlapping approachEnsuing process Specific design targets fixed at the initial stage Close cooperaton among all departments conserned are pursued under strict division of labor during the developmentOrganization According to function and often under a project Matrix or project team-type organization under a leader with limited authority project leader with authority over the entire process from planning to production to salesStrength Conducive to a relentless pursuit of superior Shorter lead time (3-4 years), high quality, and performance, function and quality attuned to needs in the marketWeakness Longer lead time (7-8 years), high development Risk of compromise on a low level; not conducive to costs an all-out pursuit of superior performance
CONCEPT New Product Development ApproachAmerican Football Style:1. Early stage (grand concept -> technical concept -> product concept): determined and clarified by a small number of project leaders, instead of long and continuous interaction among project members (Japanese rugby style).2. Division of labor is established: teams are specialized for certain functions that move simultaneously (as in rugby style) running together to meet target: cost, performance level, launch date.
CONCEPT New Product Development ApproachThe key to American Football Style:1. Comprehensive plan early in the game2. Tactics decided by few leaders
Case Study: Shin Caterpillar Mitsubishi (SCM)1963 : MHI Ltd + Caterpillar formed SCM
SCM background• Caterpillar was a limited produce company for hydraulic shovels.• MHI eager to eliminate unnecessary duplication between Hydraulic Shouvel• KOMATSU entered market in 1982
Clash on SCMConcern Items Japanese European-AmericanApproach Cost-quality-performance- safety-performance-quality- safety costWhose Lead the Concept Research & Development Marketing DevelopmentCreation Process DepartmentProject Carried-out 1. concept making 1. Sequentially processDevelopment 2. pararel on prototyping- on concept making- pilot running-preparing for prototyping-pilot mass production running-mass 3. product development 3-4 production years 2. product development 5-10 yearsStandardized Design Need to standarized
How organizeREGA PRoject• Matriks organization a. Planning division :large, medium, small b. Design divison: structure, hydraulic mechanism, electric system, other equipment• Relationships between leader a. good communication b. located next to each other c. spent much time together (private and business)• Standardizing for global market a. interplant meeting to enhance socialization for 3 different plants b. standard design drawing c. common product-decided by team each component d. multiselection concept - tested the idea with dealers - produce main selling point.
Knowledge Creation on REGA Project1. Japanese externalize their tacit knowledge into explicit through socializations (interplant meeting, self organizing team)2. American rest on externalization through a. standardized operation manuals b. through cost monitoring system
Key Success Factor on applied organization knowledge outside of Japan1. Strong participation commiment from top management2. Middle managers are assigned as global knowledge engineer3. Sufficient level of trust among participants shoud develop4. Strong ocialization and externalization
Summary1.The Japanese approach to OKC can be applied outside of Japan.2.The key is a prolonged phase of socialization and externalization due to different culture3.Organizations needs to identify their cultural barriers to speed up knowledge sharing