Five-Phase Model of the Organizational Knowledge Creation Process in Group Benchmarking

knowledge conversion and the five enabling conditions promote organizational knowledge as a five-phase model. At the same section Group Benchmarking will also be considered in relation to the model.

7.3 Five-Phase Model of the Organizational Knowledge Creation Process in Group Benchmarking

Nonaka and Takeuchi (1995) present an integrated, five-phase model of the organizational knowledge creation process, using the basic constructs presented earlier and incorporating the time dimension into their theory. The model consists of five phases: 1) sharing tacit knowledge; 2) creating concepts; 3) justifying concepts; 4) building an archetype; and 5) cross-leveling knowledge. (Figure 7.3)

129 Fig. 7.3 Five-phase model of the organizational knowledge-creation process (Nonaka and Takeuchi, 1995, p.84, modified)

The First Phase: Sharing Tacit Knowledge

Tacit knowledge that is held by individuals is the basis of organizational knowledge creation. That is why it is natural to start the process by focusing on tacit knowledge. However, tacit knowledge cannot be communicated or passed onto others easily, since it is acquired primarily through experience and not easily expressible in words. The sharing of tacit knowledge among multiple individuals with different backgrounds, perspectives, and motivations becomes the critical step for organizational knowledge creation to take place. The individuals’ emotions, feelings, and mental models have to be shared to build mutual trust.

To enable the sharing, a situation in which individuals can interact with each other through face-to-face dialogues is needed. During dialogues they share experiences and synchronize their mental rhythms. This phase of the organizational knowledge-creation process corresponds to socialization.

A self-organizing team is a typical field of interaction. The members of the team come from various functional departments working together for a common goal. This kind of team facilitates organizational knowledge creation through the multi aspect of the team members, who experience redundancy of information and share their interpretations of organizational intention. Management cause creative chaos by setting challenging goals and endowing team

Sharing tacit knowledge Creating concepts Justifying concepts Building an archetype Cross- levelling knowledge Combination Externalization Socalization Internalization Tacit knowledge From collaborating organizations

From users Internalization by user Explicit knowledge as advertisements, patents, product and / or service Tacit knowledge in organization Explicit knowledge in organization

130 members with autonomy. An autonomous team begins to interact with the external environment, accumulating both tacit and explicit knowledge.

In the Group Benchmarking process (Figure 7.1) the same phase is seen as analysis in which the group of people inside the organization, but from different duties, completes the Form concerning the present situation of networking in the organization. Each member of the group tries to express his/her feelings, attitudes and mental models with the help of face-to-face dialogue. A boundary object, i.e. the positioning matrix Form is used to offer the group members a common language; vocabulary, and subjects to focus in order to obtain a common understanding of the problem area that the management of the organization has seen well- founded from the strategic point of view. The autonomy of the group is visible when the group produces the filled Form and proceeds toward the next step of Group Benchmarking; setting targets. It is concluded that all the enabling factors of Nonaka and Takeuchi (1995) comes true in the Group Benchmarking at the same time with the first phase of organizational knowledge- creation process.

The Second Phase: Creating Concepts

The most intensive interaction between tacit and explicit knowledge occurs in the second phase when shared mental models are articulated through further continuous dialogue in the form of collective reflection. The shared tacit mental models are verbalized and finally crystallized into explicit concepts, which corresponds to externalization. This phase may be facilitated by the use of figurative language such as metaphors and analogies. Also dialectics is used to raise the quality of dialogue among team members.

In this phase concepts are created cooperatively through dialogue. Autonomy is needed in helping team members to diverge their thinking freely, with intention serving as a tool to converge their thinking in one direction. To create concepts, team members have to rethink their existing premises fundamentally. Requisite variety helps team members by providing different angles or perspectives for looking at a problem. Fluctuation and chaos also help members to change their way of thinking fundamentally. Redundancy of information enables team members to understand figurative language better and to crystallize their shared mental model.

In the Group Benchmarking process this phase is seen mainly as Setting targets (Figure 7.1). The group members inside the organization have expressed their idea of buyer/supplier relationships in the company based on their experiences and feelings. The next step is to set targets for the future relationships. The group members may have different thoughts about the future supply network. However, they need to end up a common idea of the target network. In

131 addition to metaphors and analogies that can be used, they have a boundary object, i.e. the positioning matrix Form again to help finding understanding of their tacit knowledge and expressing it as explicit knowledge. The completion of the Form happens with the help of dialogue and dialect perhaps. The group members are autonomous in their thinking and expressing ideas. Redundancy is a necessity when evaluating future needs of the organization. Fluctuation and chaos exist in a situation when future is affected by an environment and they give a freedom for the group members to consider different possibilities. Redundancy of information helps the group members to understand the expressions of each other’s and come to the most probable future target. As a conclusion can be noticed that all the features of the second phase of creating concepts are present in the Group Benchmarking and externalization of tacit knowledge mostly happens in setting targets for future supply network.

The Third Phase: Justifying Concepts

According to commonly accepted idea, knowledge is defined as justified true beliefs. Therefore, new concepts created by individuals or team need to be justified at some point in the procedure. Justification means determining if the newly created concepts are truly worthwhile for the organization and society. In order to do that, the organization must conduct the justification in an explicit way to check if the organizational intention is still intact and to ascertain if the concepts being generated meet needs of society at large. Justification criteria can be both quantitative and qualitative. The criteria need to be strictly objective and factual; but also judgmental and value-laden.

The top management of the company is the one whose role it is to formulate the justification criteria in the form of organizational intention, which is expressed in terms of strategy or vision. However, autonomous organizational units can determine sub criteria. To avoid any misunderstanding about the company’s intention, redundancy of information helps facilitate the justification process.

This phase of justification concepts can be found in the Group Benchmarking model in several steps. The strategy of the company set by top management should be seen in setting targets for future network. The supply network should fit to the policy of the company’s business strategy. The targets set for the future need to support the vision and help to achieve it. This happens by choosing the subjects for benchmarking discussions according to the company strategies i.e. picking the activities of the matrix to discuss during the benchmarking visits by keeping in mind the most relevant subjects to develop. This choosing will be done autonomously by the participating group of people in benchmarking project. Justification of

132 concepts i.e. the operations to develop can be concluded to come true also in Group Benchmarking.

The Fourth Phase: Building an Archetype

In this phase the justified concept is converted into something tangible or concrete, i.e. an archetype. An archetype can be a prototype in the case of products, or a model of operating mechanism in the case of service or organizational innovation. It is built by combining newly created explicit knowledge with existing explicit knowledge. This phase corresponds to combination in knowledge conversion spiral. This phase is complex and demands various departments within an organization to cooperate. Both requisite variety and redundancy of information facilitate this process. Organizational intention also serves as a useful tool for converging the various kinds of know-how and technologies that reside within the organization, as well as for promoting interpersonal and interdepartmental cooperation. Autonomy and fluctuation are not relevant at this phase.

In the Group Benchmarking model this phase is seen when the learned best practices from the target company are adapted and applied to own company as models of operating mechanisms. The newly applied mechanisms are not necessarily the final operating methods, but the one learned and accommodated to own circumstances. This step is called development (Figure 7.1) in the Group Benchmarking process. To be able to apply new mechanisms the organization needs a lot of information from various contributors i.e. the members of the organization. This fulfils the conditions of redundancy and requisite variety.

The Fifth Phase: Cross-Leveling of Knowledge

Organizational knowledge creation is a never-ending process that upgrades itself continuously. The new concept, which has been created, justified, and modeled, moves on to a new cycle of knowledge creation at a different ontological level (Nonaka et al., 1995, p.57). This interactive and spiral process, which is called cross-leveling of knowledge, takes place both intra-organizationally and inter-organizationally.

An enabling condition that is valid in this phase is autonomy of each organizational unit to take the knowledge developed somewhere else and applies it freely across different levels and boundaries. Internal fluctuation will facilitate knowledge transfer as will redundancy of information and requisite variety. Organizational intention will act as a control mechanism on whether or not knowledge should be cross-fertilized within the company.

133 Group Benchmarking is a continuous process as well. Intra-organizationally, knowledge that is made real or that takes form as an archetype can trigger a new cycle of knowledge creation, expanding horizontally or vertically across the organization. Inter-organizationally, knowledge created by the organization can mobilize knowledge of affiliated companies, customers, suppliers, competitors, and others outside the company through dynamic interaction. The last mentioned is especially important when the aim of the company is to develop together with its suppliers.

The epistemological dimension is the first dimension of the organizational knowledge creation. In that dimension knowledge conversion takes place between tacit and explicit knowledge. The ontological dimension, in which knowledge is created by individuals and transformed into knowledge at the group and organizational levels, forms another dimension. Both dimensions form a spiral when time is introduced as the third dimension. In Group Benchmarking the same spiral form can be noticed when the process starts from the beginning after previous activities have been applied and an organization has developed one step toward the target network. The next round may be performed on the higher ontological level or on the higher level of the network e.g. with the suppliers. However high ontological level the process will reach, each round of the Group Benchmarking starts from the tacit knowledge of individual.

7.4 Summary of the Chapter “The Role of Group Benchmarking Model in the Existing