Knowledge-creating process

The organizational process of knowledge creation presented by Nonaka and Takeuchi consists of five phases: the sharing of tacit knowledge, creation of concepts, justification of concepts, building of models and dissemination of knowledge. This model combines the modes of knowledge conversion with the enabling conditions for the knowledge spiral. (Nonaka & Takeuchi 1995, pp. 83-84) The model describing the knowledge-creating process is presented in Figure 21.

Figure 21. Knowledge-creating process (adapted from Ruohotie 2000, p. 268).

According to Nonaka and Takeuchi, the organizational process of knowledge creation starts with the sharing of tacit knowledge possessed by individuals.

This rich and unused source of new knowledge is a natural way of triggering the process of knowledge creation. Sharing tacit knowledge is not easy, as the knowledge has been mainly acquired through experience and therefore is not easily transformed into written form. The sharing of tacit knowledge with people from different backgrounds and viewpoints is an important step for knowledge creation. In order to generate a mutual feeling of trust, individuals must share their feelings and thinking models. This requires interpersonal face-to-face interaction. Typically, this kind of interaction is possible through self-organizing teams. These teams consist of members coming from a variety of functional departments, who are working together to reach a shared goal. Self-organizing teams of this type enable the process of organizational knowledge creation through the requisite variety brought by the members. The members experience redundancy of information and share their own interpretations on the intention of the organization. The management generates creative chaos by setting challenging goals and giving team members an opportunity to act autonomously. (Nonaka & Takeuchi 1995, p. 85)

The second phase of the process of knowledge creation is the most intensive phase of the interaction between tacit and explicit knowledge. Shared, tacit thinking models are put into words and phrases. Finally, they are crystallized into explicit concepts. Nonaka and Takeuchi note that in this sense the second phase of the organizational process of knowledge creation corresponds to externalization. When concepts are created, the use of analogy and metaphors helps to root a creative way of thinking in the organization. The concepts are created in cooperation through dialogue. Autonomy helps team members to think freely. Intention shows the way for members to think. When concepts are created, team members must consider the existing starting points in a thorough way. In this sense, requisite variety offers different viewpoints on the problem.

Internal or external fluctuation and chaos also helps team members to change their way of thinking. Redundancy also helps members to understand the descriptive use of language and to crystallize shared thinking models. (Nonaka

& Takeuchi 1995, pp. 85-86)

In the third phase of the process of knowledge creation, the new concepts developed by individuals or teams must be justified. In the process of justifying concepts, it is decided whether the newly developed concepts are useful from the viewpoint of the organization and the community. Individuals justify or prune information, concepts and knowledge throughout the process. However, the organization must carry out this justification in a more explicit way to ensure that the intention of the organization is in line with the concepts developed. The

organization must also ensure that the concepts correspond generally to the community’s needs. According to Nonaka and Takeuchi, the normal criteria for justification in business organizations consist of costs, profits and the evaluation of how the product affects the growth of the business. The justification criteria can be both quantitative and qualitative. It is the task of top management to define the criteria in the form of the organization’s purposefulness. This is expressed in the form of a strategy or a vision. To prevent misunderstandings of the company’s intention, redundancy of information helps to promote this process of justification. (Nonaka & Takeuchi 1995, pp. 86-87)

In the fourth phase of the process of knowledge creation, the justified concept is converted into the form of a concrete model. The building of models concerns the combination of new and existing explicit knowledge. Nonaka and Takeuchi note that for this reason, the fourth phase of the process of knowledge creation resembles combination. They also state that because this phase is a complex one, cooperation between different departments of the organization is necessary. Requisite variety and redundancy of information make this process possible. The intention of the organization combines together the different kinds of know-how and technology found within the organization. It also promotes cooperation between people and departments. In this phase of the process of knowledge creation, autonomy and fluctuation do not play such a significant role. (Nonaka & Takeuchi 1995, pp. 87-88)

Once the new concept has been created, justified and modelled, it moves to a different ontological level. The process of knowledge creation is endless and refines itself all the time. This interactive, spiral-like process, which Nonaka and Takeuchi call "networking knowledge", occurs within the organization and also between organizations. Knowledge which has become real or has been modelled can trigger a new cycle of knowledge creation by expanding both horizontally and vertically throughout the organization. Through dynamic interaction, knowledge created by an organization can trigger knowledge creation in affiliated companies, customers, suppliers, competitors or other outside parties. In order to enable this phase to function efficiently, it is vital for all units of the organization to have the autonomy to adapt knowledge developed elsewhere and to utilize it freely over boundaries and levels. The dissemination of knowledge is enabled by internal fluctuation, such as the continuous rotation of personnel to different tasks. The dissemination of knowledge is also affected by redundancy of information and requisite variety.

In relation to the dissemination of information within the organization, the intention of the organization determines whether the knowledge created should be redistributed within the company. (Nonaka & Takeuchi 1995, pp. 88-89)

2.2.6. Key findings for ontology building

The process of knowledge creation presented above should be examined holistically. All modes of knowledge conversion must be supported. This research aims to develop an assessment system that examines the knowledge creation activities of organizations. The aim is to further the realization of the different phases of the knowledge spiral.

In this research, Nonaka and Takeuchi's (1995) theory of organizational knowledge creation is used when analysing different concepts and activities supporting the modes of knowledge conversion (Figure 22). The various concepts and activities were selected based on a literature review.

Figure 22. Modes of knowledge conversion (Paajanen 2006; cf. Nonaka &

Takeuchi 1995).

The four modes of knowledge conversion form the basic structure of the ontology for knowledge creation. Knowledge creation can be seen as a management object that is easier to manage and develop when the concepts of knowledge creation are known by the members of the organization.