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AgileJapan2010 Keynote by Ikujiro Nonaka: Phronetic Leadership


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The grand father of Scrum talks about a new type of Leadership found in Japanese management. "Phronesis" is the third knowledge of Aristotle, combines action and thinking to create knowledge flow "Ba"(place).

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AgileJapan2010 Keynote by Ikujiro Nonaka: Phronetic Leadership

  1. 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. 2. Copyright © 2009 Nonaka, I
  3. 3. The Knowledge-Creating Company and Managing Flow Copyright © 2010 Nonaka, I
  4. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 26. Copyright © 2010 Nonaka, I
  27. 27. Founder’s son Andrea Founder Vincenzo Copyright Nonaka I. 2010
  28. 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. 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. 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. 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. 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. 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. 34. Knowledge Ecosystem: Organic Configuration of Ba University Government Customer Local Communities Supplier Firm Competitor
  35. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 46. Idealistic Pragmatist: Contemplation in Action Brain Brawn Deep Thinker Doer in One Person “Intellectual Muscle” Relentless Pursuit of Common Good