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Cultivating Leaders with
   Practical Wisdom
   - Scrum and Ba Building -

                Ikujiro Nonaka
        Professor Emeritus, Hitotsubashi University
    Xerox Distinguished Faculty Scholar, UC Berkeley
         The First Distinguished Drucker Scholar,
              Claremont Graduate University
Visiting Professor of Center for Knowledge and Innovation
      Research (CKIR), Helsinki School of Economics
                     March 6, 2010
Copyright © 2009 Nonaka, I
The Knowledge-Creating
Company and Managing Flow




                    Copyright © 2010 Nonaka, I
Cultivating Leaders with
   Practical Wisdom
   - Scrum and Ba Building -

                Ikujiro Nonaka
        Professor Emeritus, Hitotsubashi University
    Xerox Distinguished Faculty Scholar, UC Berkeley
         The First Distinguished Drucker Scholar,
              Claremont Graduate University
Visiting Professor of Center for Knowledge and Innovation
      Research (CKIR), Helsinki School of Economics
                     March 6, 2010
Knowledge Society
  Knowledge is the only meaningful resource today.
  How knowledge behaves as an economic resource,
we do not yet fully understand; we have not had
enough experience to formulate a theory and to test it.
We can only say so far that we need such a theory.
We need an economic theory that puts knowledge into
the center of the wealth-producing process. Such a
theory alone can explain the present economy. It
alone can explain economic growth. It alone can
explain innovation. It alone can explain how the
Japanese economy works and, above all, why it works.
                        P. F. Drucker “Post Economist Society” (1993)



                                                    Copyright Nonaka I. 2010
Knowledge is
■   Subjective
    Based on belief, context-specific
■   Process-relational
    Created in social interactions
■   Aesthetic
    Relentless pursuit of truth, goodness, and beauty
■   Created through practice
          Hence, we define Knowledge as:
     “A dynamic human process of justifying
        personal belief towards the truth.”
                                             Copyright © 2009 Nonaka, I
Two Types of Knowledge
     Tacit Knowledge                     Explicit Knowledge
Subjective and experiential
knowledge that can not
                                     Objective and rational knowledge
be expressed in words,
                                     that can be expressed in words,
sentences, numbers, or
                                     sentences, numbers, or formulas
Formulas (Context-specific)
                                     (context-free)
Cognitive Skills
    beliefs
    images                               Theoretical approach
                                         Problem solving
    perspectives                         Manuals
    mental models                        Database
Technical Skills
    craft
    know-how


                         Spiral up through
                        dynamic interaction
                      Analog-Digital Synthesis         Copyright Nonaka I. 2010
Tacit and Explicit Knowledge
                 - A metaphor: Iceberg -


                                                            Explicit
                                                          ~~~~~~~~~~~
                                                            Tacit
Essence of the metaphor is to understand and
experience an event/thing from the view of an
different event/thing.
   (Source: Lakoff, G., & Johnson, M. (1980). Metaphors we live by. Univ. of Chicago)
Tacit – Explicit Spiral
                           - Toyota Way -
(Manual can only provide explicit knowledge; at
the base, there is the invisible tacit knowledge
such as hunch or knack.)
With IT, more tacit knowledge may be
converted to explicit knowledge. While the
conversion occurs, new tacit knowledge
continue to emerge. President Watanabe
says, “with the spiral-up of tacit and explicit
knowledge, things go well.”
               Hiroshi Okuda, Former Chairman of Toyota
     Source: Okuda, H & Zhu, J.R. (2007). Chikyu kigyo Toyota ha chugoku de naniwo mezasunoka; Okuda Hiroshi no
             Toyota-ism [What global-company Toyota aims at in China: Toyota-ism of Hiroshi Okuda]. Tokyo: Kadokawa
             Gakugei Shuppan.
Organizational Knowledge Creation
                                               SECI Model
Sharing and creating                 Tacit                     Tacit                         Articulating tacit
tacit knowledge                                                                              knowledge through
through direct                   Socialization            Externalization                    dialogue and
experience                                                                                   reflection
                                                                                             4. Articulating tacit




                                                                                  Explicit
1. Perceiving reality             Environment              E       O I

                        Tacit
   as it is                                                                                     knowledge using
                                                               I            I                   symbolic language
2. Sensing and                                                     Group
   Empathizing with                  I       Individual                                      5. Translating tacit
                                                               I            I                   knowledge into a
   others and the
                                                                        I                       concept or prototype
   environment
3. Transferring of                                                                           Systemizing and
   tacit knowledge                                                                           applying explicit
                                Internalization             Combination                      knowledge and
                        Tacit




                                                                                             information




                                                                                  Explicit
Learning and                                               E        G
                                                 O
acquiring new tacit                          G                                               6. Gathering and
knowledge in                                                                                    integrating explicit
practice                                 I                     G Org. G
                                                                                                knowledge
                                                                   G                         7. Breaking down the
                                    E
9. Embodying explicit                                                                          concept and finding
    knowledge through                                                                          relationships among
    action and reflection                                                                      the concepts
10. Using simulation and            Explicit                     Explicit                    8. Editing and
     experiments                                                                                systemizing explicit
                        I = Individual, G = Group, O = Organization, E = Environment
                                                                                                knowledge
Innovation as SECI Spiral
Empathize with the reality through actual experience
(Socialization), condense the essence of awareness
into concepts (Externalization), relate the concepts
and systemize (Combination), create value in the form
of technology, products, software, services and
experiences and embody the knowledge
(Internalization), and at the same time stimulate the
emergence of new knowledge in the organization,
market and environment, and spiral up to the
Socialization step.



                                           Copyright Nonaka I. 2010
The Knowledge Leadership
Drives the dynamic process of knowledge
creation by:
  – providing knowledge vision and driving objective
  – developing and promoting the sharing of
    knowledge assets
  – creating, energizing, and connecting ba
  – enabling and promoting the continuous spiral of
    knowledge creation through dialogues and
    practices

At the base of such leadership is phronesis
                                              © Nonaka, I.
Phronesis
 (Prudence, Practical Wisdom)
A virtuous habit of making decisions and
taking actions that serve the common
good.

A capability to find a “right answer” in
particular context.

Can acquire only through high quality
direct experiences with contemplation.

                                    Copyright Nonaka I. 2010
Abilities to Constitute Phronesis
1. Ability to make judgment on goodness.
2. Ability to create ba.
3. Ability to grasp the essence of particular
   situations/things.
4. Ability to express the essence.
5. Ability to realize the concepts.
6. Ability to foster phronesis in others.

                                   Copyright © 2009 Nonaka, I
Phronetic Leadership
1. Ability to make judgment on goodness

 Every sort of expert knowledge and every inquiry,
 and similarly every action and undertaking,
 seems to seek some good.
                           Aristotle, Nicomachean Ethics

   Example: Self-sufficient values such as happiness and
   self-actualization.

 Internal Good: Realized in the course of trying to
 achieve those standards of excellence
 (artisanship).
                                                 MacIntyre
                                             Copyright Nonaka I. 2010
Knowledge Vision
Essential Questioning:
  “What do we exist for?”
     “Why does the society need us?”
     “What value can we uniquely provide?”
   “What do we want to be?”
  “Where should we live?”
A vision that transcends the existing boundary.
“You do it because you want to do it, not
   because everyone else is doing it.”
A long-time view that goes beyond the arena of
   competition. It is not a short-time view on
   efficiency in knowledge utilization.
                                     Copyright © 2009 Nonaka and Toyama
Phronetic Leadership
2. Ability to create ba

    Imaginative capacity to understand
    and empathize with others through
    daily verbal and nonverbal
    communication, to read the situation to
    judge the best timing for interaction,
    and to elicit empathy in return.


                                   Copyright Nonaka I. 2010
Ba: Sharing “here-now”
               relationship
                         Intersubjectivity




                         Shared Context               Close                        Open
Open          Close
                           in Motion
                                 (場)
                              Ba(場)
       Individual contexts are shared at “here now” context of Ba.
       Shared context becomes the base of emerging knowledge.
                                                              Copyright Nonaka I. 2010
Ba: Interpenetration of environment,
       structure and individual
Conventional Theory                Process View

                                   Environment
  Environment


                                       Ba




                                                             Structure
                      Individual
   Structure                        Here-now
                                   relationships
                                      in action

   Individual

                                           Copyright Nonaka I. & A.Hirose 2010
Ba is formed in various
          space-time
 Real
          Meeting, drinking
          Informal organization
          Project teams
          Office, factory, shop floor
          Formal organization, system
          E-mail, TV conference
Virtual

                          Copyright © 2009 Nonaka, I & R. Toyama
“Waigaya” at Honda
Share the “ba” for
three days and
three nights
                                           Team
                                      Leap the idea
 Individual      故   Thorough         Construct the
                     discussions that concept
                     break the
                     individual barriers
  © Nonaka, I.
                     (interaction)
“Waigaya” at Honda
Company prepare the ba (good hotel and good food)
  • Out of the daily work environment
Day 1: Conflict between the individuals
  • Start with “bad mouth-ing” the boss; frustration and conflicts
  • Thorough discussions lead to conflict but there is no escape
  • As the time passes, then superficial explicit knowledge runs
    out and individual barrier disappears
Day 2: Mutual understanding and acceptance
  • Accept the difference, understand the beliefs of the others
  • Accept the opinions of the others
Day 3: Leap of the minds
  • With constructive thinking, leap of the minds and concepts
    will happen
                                                   Copyright Nonaka I. 2010
Inter-subjectivity of Ba
Ba is dynamically created from the 3 steps of consciousness
3 steps of consciousness
Synthesis of senses: Like the relationship of mother and
 child, sharing the vivid present before subject-object
 separation; state of passive inter-corporality
Synthesis of intelligence: Creating meaning in the form of
 “I-It relationship” from one’s intention and
 consciousness; state of active iner-subjectivity
Synthesis of senses and intelligence: Encountering the
 other as a whole “I” in the higher dimension of “I-Thou
 relationship”; senses are not captured to the detachment
 from the other, not restricted to the self, and open to the
 other
                     Source; Yamaguchi, I. (2005). From Existence to Creation


© Nonaka, I.
Which Hand is Touching?
                       Merleau-Ponty
When I press my two hands together, it is not a matter of
two sensations felt together as one perceives two objects
placed side by side, but of an ambiguous set-up in which
both hands can alternate the roles of “touching” and “being
touched” . in this bundle of bones and muscles which my
right hand presents to my left, I can anticipate for an instant
the integument or incarnation of that other right hand, alive
and mobile, which I thrust towards things in order to
explore them. The body catches itself from the outside
engaged in a cognitive process; it tries to touch itself while
being touched.

Phenomenology of Perception, trans. Colin Smith, p.93

                                                        Copyright © 2010 Nonaka, I
Discovery of “Mirror Neurons”
  – Socialization in the Neuroscience -
“Mirror neurons” are particular type of neurons that activate
when we see an individual performs an action. Discovery
was that when we see someone performing an action or
showing a feeling, part of our motor system becomes active
‘as if’ we were executing that very same action or the
feeling that we are observing. Various actions are coded in
mirror-neuron system, so when we see other’s action, we
can instantly understand and imitate it and even understand
it’s intention.
                                Source: Iacoboni, et al. (2005), Rizzolatti (2005)
Copyright © 2010 Nonaka, I
Founder’s son Andrea




Founder Vincenzo




                        Copyright Nonaka I. 2010
Good Ba for Knowledge Emergence
1. Self-organizing with self-transcending goal
2. Direct sharing of senses, feelings and emotions
   (inter-corporeality) Sense of social Capital –
   care, love, trust, and safety
3. Shared objectives and commitment, not on-
   lookers
4. Self-awareness in the relationship with others
   (meta-recognition)
5. Permeating boundary with moving centers
6. Metaphor of sphere: Diversity of knowledge and
   efficient interactions (requisite variety)
                                     Copyright © 2009 Nonaka, I & R. Toyama
Scrum Approach
     “The New New Product Development Game”
Sequential (A) vs. Overlapping (B and C) phases of development

 A

Phase          1                    2                  3                    4                    5                    6


 B
Phase         1              2              3              4            5              6



 C
Phase 1            2        3       4        5          6



Source: Takeuchi, H. & Nonaka, I. (1986). The New New Product Development, Harvard Business Review January-February, 1986.
Scrum Approach
                          Moving the Scrum downfield
 1. Built-in instability
      Members are given a wide measure of freedom with extremely challenging goal
 2. Self-organizing project teams
      Start from “zero information” as in the start-up company; members share
      autonomy, self-transcendence, and cross-fertilization
 3. Overlapping development phases
      Development phases overlap and create “shared division of labor” where each
      member feels responsible for the whole project
 4. “Multilearning”
    Learning occurs in two dimensions; multi-level and multi-functional
 5. Subtle control
    Emphasize on self-control, control by peer pressure and control by love
 6. Organizational transfer of learning
    Learn and unlearn the past successes and failures through osmosis
Source: Takeuchi, H. & Nonaka, I. (1986). The New New Product Development, Harvard Business Review January-February, 1986.
Small World Network
        SIX DEGREES                  TIPPING POINT
   We are a happy family          Connected people are
 and we all are six degrees       able to get information
away from an Albanian farmer.     and control networks.




    The network of human         I want to be in the middle
  social interactions connect    of the network because it
   us all by six degrees of       provides me information
           separation.          and power. I can make big
                                 changes by small things.

                                                    © Nonaka・Toyama
Small World Networking
                          Rewiring the multilayered Ba                                                      “Asakai ”

                              ident                        Pre New Y
                          Pres page                           side       e
                              e                                    ntia ar
                          hom                                          l Ad
                                                                           dre
                                                                               ss
                                        Presidents Award
               rs
             ge                                                                  Pr Ne
          ana                                                                   Do eside w Ye
       l M ing                    Annual briefing to President                    me nt ar
    era eet
   n M
                                                                                     stic Vis
                                                                                          Fac its t
Ge                               by business/functional division                             iliti o
                       ary                                          Do                            es
                    idi                                                me
                  bs g                                                   sti
                Su n                                                        cM
             les eti                                                       Pre anu
         s Sa t Me                         President                          sid fac
              n
      sea ide                           Luncheon Meeting                         en turi
  Over Pres                                                                        t M ng
                                                                                      ee Su
                                                                                         tin bs
                                                                                            g  idi
                                                                                                   ar   y
                                       Management Strategy
                                           Committee                      Ma
                   e                                                     Re nage
                tiv                                                        f      m
                                                                         Co orma ent
              cu y
           xe isor e
          E v                                                              mm tio
                     te               Executive Management                    itte n
           Ad mit                            Meeting                              e
            C om


                                            “Asakai ”
                                                                )
                                (Executive Early Morning Meeting)




                                                                                                                 © Nonaka, I
Creating a Big Story: Toyota Prius

                                           2nd & 4th
  Calty Design Research               Electronics Tech Div.
    (Exterior Design)                       (Inverter)


                       Zi (G21)                          BR-VF
                      (Planning)                     (Hybrid System)
 1st Vehicle
  Tech Div.
(Suspension)          2nd Engine                              EV Development
                                     2nd Vehicle
                      Tech Div.       Tech Div.               (Motor, Battery)
                      (Engine)         (Brakes)

                   Drive-train                                     Panasonic EV
                   Tech Div.                                       Energy
                (Hybrid transaxel)
 © Nonaka, I.
Knowledge Ecosystem: Organic
           Configuration of Ba


                         University        Government
       Customer


                                            Local
                                         Communities
Supplier

                  Firm            Competitor
Phronetic Leadership
3. Ability to grasp the essence of
  particular situations/things

   The ability to recognize the constantly
   changing situation correctly, and quickly sense
   what lies behind phenomena to envision the
   future and decide on the action to be taken.

               God is in detail

                                        Copyright Nonaka I. 2010
Reality and Actuality
Reality                    Actuality
Substance: an existing     Action: a situation in
substance or object that   progress
could be observed.         Can only be grasped by
Can be recognized and      those committed to and
managed by logic.          dwelling in the actual,
                           situated experience, with
                           the five senses and through
                           empathy with others.
                                        Bin Kimura, 1994

Honda 3-Gism: Be at the actual place of work
(genba), know the actual product and situation
(genbutsu and genjyou), be realistic (genjitsuteki).
                                            Copyright Nonaka I. 2010
Contemplation in Action:
       Indwelling in Actuality with Deep Thinking

                                                    “I can see many things
                                                    when I see a machine. How
                                                    can we maneuver through
                                                    that curve? We should do
                                                    this, we should do that....
                                                    Then I think about the next
                                                    machine. We can make a
                                                    faster machine if we think
                                                    like this, and so on. It’s a
                                                    natural progress into the
                                                    next step.”
                                                    - Soichiro Honda



Source: Honda Motor Corporation
(Picture at the Automobile Hall of Fame, Detroit)


                                                             Copyright Nonaka I. 2009
                                                                                 2010
Phronetic Leadership
4. Ability to express the essence

   The ability to conceptualize and articulate
   subjective ideas in clear language, link
   these ‘micro’ concepts to a macro historical
   context and convincingly articulate them as
   vision and story for the future.




                                       Copyright Nonaka I. 2010
Concept Building: Dialoguing on the Spot
             Soichiro Honda

 Words and
  actions
                                     By articulating into
                                     language, we
                                     clearly understand
                                     what we are
                                     thinking
Drawing on
the floor

 Source: Honda Motor Corporation
 Automobile Hall of Fame (Detroit)

                                           Copyright Nonaka I. 2010
Phronetic Leadership
5. Ability to realize the concepts

    The ability to bring people together and
    spur them to action, combining and
    synthesizing everyone’s knowledge and
    efforts in pursuit of the goal, by choosing
    and utilizing the means and rhetoric (the art
    of effective or persuasive speaking or
    writing) suitable to each particular situation
    with shrewdness and determination.


                                          Copyright Nonaka I. 2010
Why Practical Wisdom is important
             - Reasoning - in - Context -

Essence of Management: Making the right judgment and
  taking action in the interactions of particular context (time,
  space and relationship)
Center of decision making is a process of reasoning and
  justifying the truth through dialogue and practice in the
  competing objectivity and interpretations.
Basis of decision making is not abstract and subjective
  theory or quantitative variables; but the sensitivity to the
  practical context of the problem



                                                         © Nonaka I.
Phronetic Leadership
6. Ability to foster phronesis in others
   The ability to create a system of distributed
   phronesis by fostering and transferring the
   existing phronetic capabilities of individuals to
   others to build a resilient organization which
   can respond flexibly and creatively to any
   situation to pursue its own good.



                                          Copyright Nonaka I. 2010
System to distribute phronesis
            - LPL and PL to nurture Honda DNA -
                                                   LPL
                                                In charge of
                                                development


        Engineering
                                                 Test PL       Design PL
            PL
          ●Engine                               ●Engine        ● Layout
          ●Body                                 ●Wind-tunnel   ● Exterior
          ●Suspension                           ●Crash         ● Interior
          ●Rigging                              ●Emission      ● Color
             etc                                ●Durability    ● Design data
                                                   etc         ● Design model
                                                                   etc
Source: Honda Motor Company internal material                        Copyright Nonaka I. 2010
Middle-up-down Knowledge-creation
                   Process
  Grand Theory (What ought to be)

                   (Top)

  Solving
contradiction   Mid-range theory
                    (Middle)




Contradiction
                                    Cross-leveling
                Reality (What is)
                                    of Knowledge

                   (Front-line)
                                       Copyright Nonaka I. 2010
Phronetic Leadership
                      Explicit Knowledge

                      Objectivity                                      Common
                      Language
                      Universal
                                                      Sensitivity       Good
                       Idealism
            Ba
                                                   ac ti c e
                                          Pr
                                      and
Mu




                                  gue
                                                               Kata
  lti-la




                            Dialo                              (Creative Routine)
    yer
       ed
          Neto




                                 Subjectivity
               wor




                                 Experience
                  k




                                  Particular
                                 Pragmatism
                                 Tacit Knowledge                    Copyright Nonaka I. & T. Hirata 2010
Idealistic Pragmatist:
   Contemplation in Action
   Brain                             Brawn
Deep Thinker                          Doer




                   in One Person
               “Intellectual Muscle”
       Relentless Pursuit of Common Good

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AgileJapan2010 Keynote by Ikujiro Nonaka: Phronetic Leadership

  • 1. Cultivating Leaders with Practical Wisdom - Scrum and Ba Building - Ikujiro Nonaka Professor Emeritus, Hitotsubashi University Xerox Distinguished Faculty Scholar, UC Berkeley The First Distinguished Drucker Scholar, Claremont Graduate University Visiting Professor of Center for Knowledge and Innovation Research (CKIR), Helsinki School of Economics March 6, 2010
  • 2. Copyright © 2009 Nonaka, I
  • 3. The Knowledge-Creating Company and Managing Flow Copyright © 2010 Nonaka, I
  • 4. Cultivating Leaders with Practical Wisdom - Scrum and Ba Building - Ikujiro Nonaka Professor Emeritus, Hitotsubashi University Xerox Distinguished Faculty Scholar, UC Berkeley The First Distinguished Drucker Scholar, Claremont Graduate University Visiting Professor of Center for Knowledge and Innovation Research (CKIR), Helsinki School of Economics March 6, 2010
  • 5. Knowledge Society Knowledge is the only meaningful resource today. How knowledge behaves as an economic resource, we do not yet fully understand; we have not had enough experience to formulate a theory and to test it. We can only say so far that we need such a theory. We need an economic theory that puts knowledge into the center of the wealth-producing process. Such a theory alone can explain the present economy. It alone can explain economic growth. It alone can explain innovation. It alone can explain how the Japanese economy works and, above all, why it works. P. F. Drucker “Post Economist Society” (1993) Copyright Nonaka I. 2010
  • 6. Knowledge is ■ Subjective Based on belief, context-specific ■ Process-relational Created in social interactions ■ Aesthetic Relentless pursuit of truth, goodness, and beauty ■ Created through practice Hence, we define Knowledge as: “A dynamic human process of justifying personal belief towards the truth.” Copyright © 2009 Nonaka, I
  • 7. Two Types of Knowledge Tacit Knowledge Explicit Knowledge Subjective and experiential knowledge that can not Objective and rational knowledge be expressed in words, that can be expressed in words, sentences, numbers, or sentences, numbers, or formulas Formulas (Context-specific) (context-free) Cognitive Skills beliefs images Theoretical approach Problem solving perspectives Manuals mental models Database Technical Skills craft know-how Spiral up through dynamic interaction Analog-Digital Synthesis Copyright Nonaka I. 2010
  • 8. Tacit and Explicit Knowledge - A metaphor: Iceberg - Explicit ~~~~~~~~~~~ Tacit Essence of the metaphor is to understand and experience an event/thing from the view of an different event/thing. (Source: Lakoff, G., & Johnson, M. (1980). Metaphors we live by. Univ. of Chicago)
  • 9. Tacit – Explicit Spiral - Toyota Way - (Manual can only provide explicit knowledge; at the base, there is the invisible tacit knowledge such as hunch or knack.) With IT, more tacit knowledge may be converted to explicit knowledge. While the conversion occurs, new tacit knowledge continue to emerge. President Watanabe says, “with the spiral-up of tacit and explicit knowledge, things go well.” Hiroshi Okuda, Former Chairman of Toyota Source: Okuda, H & Zhu, J.R. (2007). Chikyu kigyo Toyota ha chugoku de naniwo mezasunoka; Okuda Hiroshi no Toyota-ism [What global-company Toyota aims at in China: Toyota-ism of Hiroshi Okuda]. Tokyo: Kadokawa Gakugei Shuppan.
  • 10. Organizational Knowledge Creation SECI Model Sharing and creating Tacit Tacit Articulating tacit tacit knowledge knowledge through through direct Socialization Externalization dialogue and experience reflection 4. Articulating tacit Explicit 1. Perceiving reality Environment E O I Tacit as it is knowledge using I I symbolic language 2. Sensing and Group Empathizing with I Individual 5. Translating tacit I I knowledge into a others and the I concept or prototype environment 3. Transferring of Systemizing and tacit knowledge applying explicit Internalization Combination knowledge and Tacit information Explicit Learning and E G O acquiring new tacit G 6. Gathering and knowledge in integrating explicit practice I G Org. G knowledge G 7. Breaking down the E 9. Embodying explicit concept and finding knowledge through relationships among action and reflection the concepts 10. Using simulation and Explicit Explicit 8. Editing and experiments systemizing explicit I = Individual, G = Group, O = Organization, E = Environment knowledge
  • 11. Innovation as SECI Spiral Empathize with the reality through actual experience (Socialization), condense the essence of awareness into concepts (Externalization), relate the concepts and systemize (Combination), create value in the form of technology, products, software, services and experiences and embody the knowledge (Internalization), and at the same time stimulate the emergence of new knowledge in the organization, market and environment, and spiral up to the Socialization step. Copyright Nonaka I. 2010
  • 12. The Knowledge Leadership Drives the dynamic process of knowledge creation by: – providing knowledge vision and driving objective – developing and promoting the sharing of knowledge assets – creating, energizing, and connecting ba – enabling and promoting the continuous spiral of knowledge creation through dialogues and practices At the base of such leadership is phronesis © Nonaka, I.
  • 13. Phronesis (Prudence, Practical Wisdom) A virtuous habit of making decisions and taking actions that serve the common good. A capability to find a “right answer” in particular context. Can acquire only through high quality direct experiences with contemplation. Copyright Nonaka I. 2010
  • 14. Abilities to Constitute Phronesis 1. Ability to make judgment on goodness. 2. Ability to create ba. 3. Ability to grasp the essence of particular situations/things. 4. Ability to express the essence. 5. Ability to realize the concepts. 6. Ability to foster phronesis in others. Copyright © 2009 Nonaka, I
  • 15. Phronetic Leadership 1. Ability to make judgment on goodness Every sort of expert knowledge and every inquiry, and similarly every action and undertaking, seems to seek some good. Aristotle, Nicomachean Ethics Example: Self-sufficient values such as happiness and self-actualization. Internal Good: Realized in the course of trying to achieve those standards of excellence (artisanship). MacIntyre Copyright Nonaka I. 2010
  • 16. Knowledge Vision Essential Questioning: “What do we exist for?” “Why does the society need us?” “What value can we uniquely provide?” “What do we want to be?” “Where should we live?” A vision that transcends the existing boundary. “You do it because you want to do it, not because everyone else is doing it.” A long-time view that goes beyond the arena of competition. It is not a short-time view on efficiency in knowledge utilization. Copyright © 2009 Nonaka and Toyama
  • 17. Phronetic Leadership 2. Ability to create ba Imaginative capacity to understand and empathize with others through daily verbal and nonverbal communication, to read the situation to judge the best timing for interaction, and to elicit empathy in return. Copyright Nonaka I. 2010
  • 18. Ba: Sharing “here-now” relationship Intersubjectivity Shared Context Close Open Open Close in Motion (場) Ba(場) Individual contexts are shared at “here now” context of Ba. Shared context becomes the base of emerging knowledge. Copyright Nonaka I. 2010
  • 19. Ba: Interpenetration of environment, structure and individual Conventional Theory Process View Environment Environment Ba Structure Individual Structure Here-now relationships in action Individual Copyright Nonaka I. & A.Hirose 2010
  • 20. Ba is formed in various space-time Real Meeting, drinking Informal organization Project teams Office, factory, shop floor Formal organization, system E-mail, TV conference Virtual Copyright © 2009 Nonaka, I & R. Toyama
  • 21. “Waigaya” at Honda Share the “ba” for three days and three nights Team Leap the idea Individual 故 Thorough Construct the discussions that concept break the individual barriers © Nonaka, I. (interaction)
  • 22. “Waigaya” at Honda Company prepare the ba (good hotel and good food) • Out of the daily work environment Day 1: Conflict between the individuals • Start with “bad mouth-ing” the boss; frustration and conflicts • Thorough discussions lead to conflict but there is no escape • As the time passes, then superficial explicit knowledge runs out and individual barrier disappears Day 2: Mutual understanding and acceptance • Accept the difference, understand the beliefs of the others • Accept the opinions of the others Day 3: Leap of the minds • With constructive thinking, leap of the minds and concepts will happen Copyright Nonaka I. 2010
  • 23. Inter-subjectivity of Ba Ba is dynamically created from the 3 steps of consciousness 3 steps of consciousness Synthesis of senses: Like the relationship of mother and child, sharing the vivid present before subject-object separation; state of passive inter-corporality Synthesis of intelligence: Creating meaning in the form of “I-It relationship” from one’s intention and consciousness; state of active iner-subjectivity Synthesis of senses and intelligence: Encountering the other as a whole “I” in the higher dimension of “I-Thou relationship”; senses are not captured to the detachment from the other, not restricted to the self, and open to the other Source; Yamaguchi, I. (2005). From Existence to Creation © Nonaka, I.
  • 24. Which Hand is Touching? Merleau-Ponty When I press my two hands together, it is not a matter of two sensations felt together as one perceives two objects placed side by side, but of an ambiguous set-up in which both hands can alternate the roles of “touching” and “being touched” . in this bundle of bones and muscles which my right hand presents to my left, I can anticipate for an instant the integument or incarnation of that other right hand, alive and mobile, which I thrust towards things in order to explore them. The body catches itself from the outside engaged in a cognitive process; it tries to touch itself while being touched. Phenomenology of Perception, trans. Colin Smith, p.93 Copyright © 2010 Nonaka, I
  • 25. Discovery of “Mirror Neurons” – Socialization in the Neuroscience - “Mirror neurons” are particular type of neurons that activate when we see an individual performs an action. Discovery was that when we see someone performing an action or showing a feeling, part of our motor system becomes active ‘as if’ we were executing that very same action or the feeling that we are observing. Various actions are coded in mirror-neuron system, so when we see other’s action, we can instantly understand and imitate it and even understand it’s intention. Source: Iacoboni, et al. (2005), Rizzolatti (2005)
  • 26. Copyright © 2010 Nonaka, I
  • 27. Founder’s son Andrea Founder Vincenzo Copyright Nonaka I. 2010
  • 28. Good Ba for Knowledge Emergence 1. Self-organizing with self-transcending goal 2. Direct sharing of senses, feelings and emotions (inter-corporeality) Sense of social Capital – care, love, trust, and safety 3. Shared objectives and commitment, not on- lookers 4. Self-awareness in the relationship with others (meta-recognition) 5. Permeating boundary with moving centers 6. Metaphor of sphere: Diversity of knowledge and efficient interactions (requisite variety) Copyright © 2009 Nonaka, I & R. Toyama
  • 29. Scrum Approach “The New New Product Development Game” Sequential (A) vs. Overlapping (B and C) phases of development A Phase 1 2 3 4 5 6 B Phase 1 2 3 4 5 6 C Phase 1 2 3 4 5 6 Source: Takeuchi, H. & Nonaka, I. (1986). The New New Product Development, Harvard Business Review January-February, 1986.
  • 30. Scrum Approach Moving the Scrum downfield 1. Built-in instability Members are given a wide measure of freedom with extremely challenging goal 2. Self-organizing project teams Start from “zero information” as in the start-up company; members share autonomy, self-transcendence, and cross-fertilization 3. Overlapping development phases Development phases overlap and create “shared division of labor” where each member feels responsible for the whole project 4. “Multilearning” Learning occurs in two dimensions; multi-level and multi-functional 5. Subtle control Emphasize on self-control, control by peer pressure and control by love 6. Organizational transfer of learning Learn and unlearn the past successes and failures through osmosis Source: Takeuchi, H. & Nonaka, I. (1986). The New New Product Development, Harvard Business Review January-February, 1986.
  • 31. Small World Network SIX DEGREES TIPPING POINT We are a happy family Connected people are and we all are six degrees able to get information away from an Albanian farmer. and control networks. The network of human I want to be in the middle social interactions connect of the network because it us all by six degrees of provides me information separation. and power. I can make big changes by small things. © Nonaka・Toyama
  • 32. Small World Networking Rewiring the multilayered Ba “Asakai ” ident Pre New Y Pres page side e e ntia ar hom l Ad dre ss Presidents Award rs ge Pr Ne ana Do eside w Ye l M ing Annual briefing to President me nt ar era eet n M stic Vis Fac its t Ge by business/functional division iliti o ary Do es idi me bs g sti Su n cM les eti Pre anu s Sa t Me President sid fac n sea ide Luncheon Meeting en turi Over Pres t M ng ee Su tin bs g idi ar y Management Strategy Committee Ma e Re nage tiv f m Co orma ent cu y xe isor e E v mm tio te Executive Management itte n Ad mit Meeting e C om “Asakai ” ) (Executive Early Morning Meeting) © Nonaka, I
  • 33. Creating a Big Story: Toyota Prius 2nd & 4th Calty Design Research Electronics Tech Div. (Exterior Design) (Inverter) Zi (G21) BR-VF (Planning) (Hybrid System) 1st Vehicle Tech Div. (Suspension) 2nd Engine EV Development 2nd Vehicle Tech Div. Tech Div. (Motor, Battery) (Engine) (Brakes) Drive-train Panasonic EV Tech Div. Energy (Hybrid transaxel) © Nonaka, I.
  • 34. Knowledge Ecosystem: Organic Configuration of Ba University Government Customer Local Communities Supplier Firm Competitor
  • 35. Phronetic Leadership 3. Ability to grasp the essence of particular situations/things The ability to recognize the constantly changing situation correctly, and quickly sense what lies behind phenomena to envision the future and decide on the action to be taken. God is in detail Copyright Nonaka I. 2010
  • 36. Reality and Actuality Reality Actuality Substance: an existing Action: a situation in substance or object that progress could be observed. Can only be grasped by Can be recognized and those committed to and managed by logic. dwelling in the actual, situated experience, with the five senses and through empathy with others. Bin Kimura, 1994 Honda 3-Gism: Be at the actual place of work (genba), know the actual product and situation (genbutsu and genjyou), be realistic (genjitsuteki). Copyright Nonaka I. 2010
  • 37. Contemplation in Action: Indwelling in Actuality with Deep Thinking “I can see many things when I see a machine. How can we maneuver through that curve? We should do this, we should do that.... Then I think about the next machine. We can make a faster machine if we think like this, and so on. It’s a natural progress into the next step.” - Soichiro Honda Source: Honda Motor Corporation (Picture at the Automobile Hall of Fame, Detroit) Copyright Nonaka I. 2009 2010
  • 38. Phronetic Leadership 4. Ability to express the essence The ability to conceptualize and articulate subjective ideas in clear language, link these ‘micro’ concepts to a macro historical context and convincingly articulate them as vision and story for the future. Copyright Nonaka I. 2010
  • 39. Concept Building: Dialoguing on the Spot Soichiro Honda Words and actions By articulating into language, we clearly understand what we are thinking Drawing on the floor Source: Honda Motor Corporation Automobile Hall of Fame (Detroit) Copyright Nonaka I. 2010
  • 40. Phronetic Leadership 5. Ability to realize the concepts The ability to bring people together and spur them to action, combining and synthesizing everyone’s knowledge and efforts in pursuit of the goal, by choosing and utilizing the means and rhetoric (the art of effective or persuasive speaking or writing) suitable to each particular situation with shrewdness and determination. Copyright Nonaka I. 2010
  • 41. Why Practical Wisdom is important - Reasoning - in - Context - Essence of Management: Making the right judgment and taking action in the interactions of particular context (time, space and relationship) Center of decision making is a process of reasoning and justifying the truth through dialogue and practice in the competing objectivity and interpretations. Basis of decision making is not abstract and subjective theory or quantitative variables; but the sensitivity to the practical context of the problem © Nonaka I.
  • 42. Phronetic Leadership 6. Ability to foster phronesis in others The ability to create a system of distributed phronesis by fostering and transferring the existing phronetic capabilities of individuals to others to build a resilient organization which can respond flexibly and creatively to any situation to pursue its own good. Copyright Nonaka I. 2010
  • 43. System to distribute phronesis - LPL and PL to nurture Honda DNA - LPL In charge of development Engineering Test PL Design PL PL ●Engine ●Engine ● Layout ●Body ●Wind-tunnel ● Exterior ●Suspension ●Crash ● Interior ●Rigging ●Emission ● Color etc ●Durability ● Design data etc ● Design model etc Source: Honda Motor Company internal material Copyright Nonaka I. 2010
  • 44. Middle-up-down Knowledge-creation Process Grand Theory (What ought to be) (Top) Solving contradiction Mid-range theory (Middle) Contradiction Cross-leveling Reality (What is) of Knowledge (Front-line) Copyright Nonaka I. 2010
  • 45. Phronetic Leadership Explicit Knowledge Objectivity Common Language Universal Sensitivity Good Idealism Ba ac ti c e Pr and Mu gue Kata lti-la Dialo (Creative Routine) yer ed Neto Subjectivity wor Experience k Particular Pragmatism Tacit Knowledge Copyright Nonaka I. & T. Hirata 2010
  • 46. Idealistic Pragmatist: Contemplation in Action Brain Brawn Deep Thinker Doer in One Person “Intellectual Muscle” Relentless Pursuit of Common Good