Over the past five years, IRN has written numerous articles on innovation, new product development, and competitive positioning. In the last few months, everywhere you turn there are articles and books on the importance of innovation and its role in the United States recapturing its lead in manufacturing and other business segments. The title of one of the most popular new innovation books by John Kao says it all: Innovation Nation: How America is Losing Its Innovation Edge, Why It Matters, and What Can We Do to Get It Back.
Underlying all the buzzwords and focus on innovation, however, is the concept of the learning organization. Without creating a culture that embraces knowledge and consciously focuses on nurturing knowledge creation as a competitive asset, innovation is merely a “concept du jour”. The best definition we have seen of a learning organization came from David Garvin in a July/August 2004 article in the Harvard Business Review entitled: Building A Learning Organization. He says, “A learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.” While that may seem like a statement of the obvious, getting an organization to actually behave in this fashion is a major challenge. Garvin goes on to identify five key attributes of any learning organization:
- Systematic Problem Solving
- Learning from Past Experience
- Learning from Others
- Transferring Knowledge
From our experience, most companies do well in a few of these areas, but rarely in all five. We believe the idea of experimentation has been lost in many organizations and that this “freedom to fail” is a key element of any successful innovation strategy.
There are, however, different kinds of knowledge, and most discussions about learning organizations emphasize the difference between two different types. They are:
- Explicit or formal knowledge. This knowledge can be expressed in a system of rules, and easily communicated and shared, as in the design for a product, or the description of a business process.
- Tacit or informal knowledge. Knowledge of this type is highly personal, difficult to formulate or communicate, is strongly rooted in action, and is highly contextual in nature. It is the instinct and intuition that characterizes an experienced practitioner.
- Much of the process of a learning organization involves nurturing tacit knowledge and facilitating the process of its conversion into explicit knowledge and then back into tacit knowledge in new contexts. The graphic demonstrates this process which is fundamental to institutionalizing innovation.
One of the things many people misunderstand about the Japanese approach to lean is that capturing and disseminating knowledge is the basis for everything they do. This is well described in a terrific book by Ikujiro Nonaka, The Knowledge-Creating Company. As he describes, “The centerpiece of the Japanese approach is the recognition that creating new knowledge is not simply a matter of processing objective information. Rather, it depends on tapping the tacit and often highly subjective insights, intuitions, and hunches of individual employees and making those insights available for testing and use by the company as a whole.” Again, this doesn’t happen through osmosis, a company must have a process to ensure that this happens consistently.
New knowledge always begins with the individual. Making personal knowledge available to others is the central activity of the knowledge-creating company. Once this process is institutionalized, innovation becomes part of the culture and flows out of multiple company activities.