1. Running Head:A Synopsis of Phronesis McNabb 1
A Synopsis of Phronesis
Thomas McNabb
Amberton University
Paper presented in Partial Fulfillment
Of the Requirements of
MGT6203.E1 Strategic Management
Summer 2014
Dr. Steve Tidwell
June 20, 2014

2. A Synopsis of Phronesis McNabb 2
Abstract
On occasion, strategic analysis of a company may be studied by the masses to determine if an
investment is warranted. The analysis will show real time results, but it cannot show the
epistemology that a company uses to reach the result of the analysis. The question still remains;
is the philosophy of the upper management sound, or have they found the proverbially acorn?
This essay examines phronesis as an addendum to practical syllogism, and examines the
successful implementation of this philosophy by Souichiro Honda, the founder of Honda Motor
Co. Understanding the long term strategy of a company should be important to investors,
employees, and especially to eventual users of the company’s output.
Keywords: Syllogism, Phronesis, Techne, Episteme, Statistical Process Control, Philosophy,
Epistemology, Six Sigma, Idealistic Pragmatism

3. A Synopsis of Phronesis McNabb 3
Framework
The article, Strategic Management as Distributed Practical Wisdom, uses philosophy to
stress the emphasis that technological knowledge is better served as idealistic pragmatism.
Basically, it reads that if one uses logic to determine a solution to an issue, and then uses strategy
to implement the logic, then knowledge is created, and thus the implementer gains wisdom. The
article goes on to point out that strategy will create value, and when combined with technology
creates a product or service. The question becomes what to do with the end result, how can one
make this product or service viable for the common good? Aristotle develops a term named
“phronesis, [which] is the ability to understand and bring to fruition that which is considered
good by individual customers in specific times and situations” (Nonaki & Toyama, 2007).
Major Points
There are different thought processes of exactly what strategic management is suppose to
represent. Some strategic management philosophies seem to suggest that a company take
advantage of a competitive advantage for maximum profitability; however, this article takes a
different direction then that thought process. The authors of the article study the automobile
company started by Souichiro Honda when his phronesis thought process makes its presence
known when his company is only manufacturing motorcycles. He looks beyond his
organizational assets and, “… envision[s] a future of being in the global automobile market”
(Nonaki & Toyama, 2007). Although all logic points towards profitability in motorcycles, and
great risk in automobiles, he denies rationale, and pursues both avenues. Honda chooses to
believe that, “a dynamic process... [cannot] be predicted by rationalist theories of strategy based
on static analysis of the environment [nor a] firm’s resources” (Nonaki & Toyama, 2007).

4. A Synopsis of Phronesis McNabb 4
Methodology and Epistemology
Aristotle “…distinguishes between three types of knowledge: episteme, techne, and
phronesis” (Nonaki & Toyama, 2007). Episteme by definition is, “the body of ideas that
determine the knowledge that is intellectually certain at any particular time” (Episteme, 2014),
which is also the root of the term epistemology. In this article the truth/knowledge, or episteme,
is determined by the wisdom gained from past strategies that have met with success (Nonaki &
Toyama, 2007). Techne is basically the technique or skill ability necessary to covert knowledge
into a product or service for the common good (Nonaki & Toyama, 2007). Phronesis is the
ability to foresee the success of using episteme and techne to “…make a judgment on
‘goodness,’…to share contexts…to create the shared space of knowledge, …to grasp the essence
of particular situations,…to reconstruct the particulars into universals, … [to] use political means
to realize concepts for the common good ,…[and] the ability to foster phronesis in others…”
(Nonaki & Toyama, 2007).
An analogy to explain the thought process of this article, and Mr. Honda’s phronesis can
be gained by this author’s experience using six sigma. This author has been using SPC,
Statistical Process Control, charts for most of his operational career to ensure the plant process
stays within a specified range predetermined by a process engineer. Although all the operators
realize the concept, and thus follow the instructions, the SPC charts are not thoroughly
explained. For example, there is a 68% chance the sample will fall directly on the mean, but a
99.7% chance the sample will stay within 3 sigmas of the mean, which is considered normal. If
the samples fall outside of the range, there is a .03 chance that the sample is normal, so the odds
are that an issue needs to be resolved. Theses analysis come from years of perfection of the SPC

5. A Synopsis of Phronesis McNabb 5
which is developed “[i]n 1924, [when] Shewhart propose[s] his theory of variability in which he
attribute[s] the sources of variability as either assignable-cause or chance-cause variation. On 16
May 1924 he prepare[s] a technical memorandum of less than one page in which he introduce[s]
the control chart as a tool for distinguishing between these two sources of variability. By using
the control chart to bring the process into a state of statistical control, where only chance causes
are present, and maintaining this in-control state, it is possible to predict how the future process
output will behave and from this the process can be managed economically” (Giants of quality -
Walter Shewhart, 2011).
There is a competitive advantage to using SPC charts; however, phronesis is not used in
its entirety at this author’s previous place of employment because although the engineers have
the strategy and the knowledge to use six sigma, they share just enough knowledge to meet their
means. The engineers do not share their entire wisdom and thus the episteme/ universal truth is
lost to the company as a whole.
Mr. Honda is a phronetic leader, and thus instills into his organizational structure, “shared
practices through which it can detect and process various problems and solve them” (Nonaki &
Toyama, 2007). By introduction, the article states that, “phronetic leaders must be able to
synthesize contextual knowledge accumulated though experience, with universal knowledge
gained through training” (Nonaki & Toyama, 2007). Mr. Honda does not place very much
emphasis on what he thinks is good enough for a product; instead, he writes “philosophy is more
important than technologies…there is no meaning in a technology if, at the base of it, it does not
consider people, …[so] at Honda the most important question asked of everyone is: What do you
think?” (Nonaki & Toyama, 2007). Mr. Honda is not afraid of failure, and tries to instill this

6. A Synopsis of Phronesis McNabb 6
thought process into his employees. His words are captured as Honda Motor’s mantel piece
when he says, “[m]any people dream of success…to me success can only be achieved through
repeated failure and introspection. In fact, success represents 1% of your work which results
from the 99% that is called failure” (Soichiro Honda, 2007).
Quality and Utility
If a company is to follow a mantra, Honda Motor’s record over the years, which
attributes using episteme and techne, guided by phronesis as a map to success, seems to have a
positive inclination. The organization where this author currently works is experiencing a
tremendous growth, and knowledge seems to be coming in from all directions. There are people
joining the company from all over the world, and many times there are differences of opinion.
Aristotle writes of a golden mean, which is the ability of a phronetic leader to take all
opinionated inputs, and then to balance the outputs in a harmonious fashion (Nonaki & Toyama,
2007). At the company this author is employed, Cheniere Energy, it currently has a very strategic
process being undertaken. The article reads that, “[t]he reality of the strategic process is that it is
dynamic and full of confusion and contradiction…[however,] in a knowledge-creating
organization, contradictions are not obstacles to overcome, but are necessary for the creation of
knowledge” (Nonaki & Toyama, 2007). A good phronectic leader will be able to negate the
dichotomy and in the end, knowledge will be gained by the company (Nonaki & Toyama, 2007).
Cheniere Energy has a lot to gain by following this concept.
Conclusion

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The question now becomes how to implement phronesis into an organization. Typically,
most companies this author is familiar with have practiced a logical syllogism because of the
attitudes of upper management. According to philosophy, logical syllogism is based upon two
premises, a major and a minor describing a specific event, and then deducing a conclusion from
the inevitable. An example of a major premise is, all men and women die; the minor premise will
be that the reader of this essay has to be a man or a woman, and thus they too will one day die.
The deductive reasoning in this case is that if both premises are true, then the conclusion must
also be true (Dodson, 2000). When management perceives to forego an undeniable conclusion, it
is being naïve. A company should allude to an aurora of inspiration and growth, in which case
phronesis is best served as practical syllogism.
When practical syllogism is used it entails an ambiguity when surmising a conclusion
(Nonaki & Toyama, 2007). This happens because the minor premise is known, and in Cheniere
Energy’s case, it has a minor premise that all departments need to be ready for start-up of the
new liquefaction facility. The actions affiliated with this endeavor have an intention, but a
specific outcome remains inconclusive, which allows for the company to “…freely combine the
vertical logic of deduction with the horizontal, analogical reasoning of induction to achieve the
objective through hypothesis building and testing” (Nonaki & Toyama, 2007).
Although many managers develop their techne, (technique), based upon episteme, which
is (universal truth), philosophy proves that the universal truth of episteme is at best subjective.
Strategic management is based upon practical syllogism because a foregone conclusion is not
provable. This means that the epistemology in which a company embarks upon is subjective to

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those in charge; in which case, phronesis has proven to be a viable attribute in the guidance of
Honda Motor’s strategic management, as it can be to others.

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Reference
Dodson, K. E. (2000). Ways of Knowing. Dubuque: Kendall/Hunt Publishing Company.
Episteme. (2014, 6 19). Retrieved from Dictionary.com's 21st Century Lexicon:
http://dictionary.reference.com/cite.html?qh=episteme&ia=dict21
Giants of quality - Walter Shewhart. (2011, 12). Quality & Reliability Engineering International,
979.
Nonaki, I., & Toyama, R. (2007). Strategic management as distributed practical wisdom
(phronesis). Industrial & Corporate Change,, 16(3), 371-394.
Soichiro Honda. (2007). Bloomsbury Business Library - Business Thinkers & Management
Giants, 17.