I just finished reading Ikujiro Nonaka’s article entitled ’The Knowledge-Creating Company’ which was published in 1991 in the Harvard Business Review. There is a lot to unpack from such a short article and this write-up will be my reference for what I learned and allow me to theorize how his work might apply to the games biz.
‘Tacit’ Knowledge
“We can know more than we can tell” –Michael Polanyi
Nonaka’s article introduces the concept of ‘Tacit’ knowledge. Tacit knowledge is commonly described as know-how, but goes beyond technical proficiency and skill. Tacit knowledge includes the mental-models, beliefs or perspectives that we often taken for granted. Tacit knowledge is different from traditional explicit (or objective) knowledge, which is easy to formalize and transfer. Tacit knowledge is like brilliance in that it can be difficult to quantify but is very valuable. Who creates tacit knowledge?
People. Humans. We all create tacit knowledge, even unconsciously. Which is why we must emphasize the importance of Human Resource. Human Resource is not what fills a staffing plan; it is what drives creativity and innovation and where knowledge is created. “New knowledge always begins with the individual.”
I think it’s important to remember that knowledge is not always created in the office. Valuable insights or ideas might come from a hobby, a personal project or a long shower. It’s why modern companies like Google pay their employees to explore and digest. Time to think and digest is absent at most companies and needs to be improved.
The Knowledge-Creating Company
A Knowledge-Creating Company is a positive feedback loop of knowledge exchange that resembles a spiral. Knowledge goes through four transitions before repeating itself:
- Tacit to tacit. An individual acquires know-how or a new perspective through socialization.
- Tacit to explicit. An individual converts this know-how into information and shares it with their team.
- Explicit to explicit. The team makes this information standard.
- Explicit to tacit. The team has internalized this information and takes it for granted. An individual uses this information to reframe their thinking and thusly creates new tacit knowledge.
Central to Nonaka’s article is the concept of knowledge changing phases. Tacit knowledge becomes practical, easily communicated explicit knowledge and vice versa. As a company, this is how we can stay competitive because we constantly threatened by new technology and competitors. If our company is constantly innovating (parallels Lean’s constant improvement) we cans stay ahead and if we correctly manage the serendipitous nature of innovation, everyone benefits.
Managing the Knowledge-Creating Company
It’s important to note that a Knowledge-Creating Company requires both autonomy and personal commitment from its employees. In return, managers provide a flexible environment that is conducive to innovation. Leading through mandate or strict directives might limit their employees’ creativity or damage their commitment. Instead it is management’s job to inspire the company, not control it.
Redundancy is another non-intuitive principle of the Knowledge-Creating Company. Redundancy is usually regarded as waste, but redundancy can help can help the creation and spread of knowledge. Nonaka provides these examples:
- Redundancy via Internal Competition. By having several teams work towards the same goal, they can effectively evaluate each other and agree on the best approach.
- Redundancy via Strategic Rotation. By carefully moving individuals from one discipline to work with a team of another discipline, both the individual and his new team gain a better understanding of how the company operates. The game biz counterpart to this is probably the strike team or embedment. My career might also be an example of strategic rotation.
- Redundancy via Access to Information: Free access to information allows individuals to interact and communicate on equal terms. This way, no individual or group has the sole responsibility for creating new knowledge and knowledge has value regardless of where in the hierarchy it was created. Example.
Managing Knowledge Creation
Knowledge creation is a product of the interaction between three roles: frontline employees, senior management and teams overseen by middle management.
Who are we talking about when it comes to games? From a macro perspective, you might think of a whole studio as frontline employees, a publisher as senior management and the studio leaders as middle management. Or you could just look at a studio, with most of the developers being considered frontline employees, the producer or studio management as senior management and discipline leads as middle management.
Frontline employees are absolute experts at what they do and the day-to-day realities of the business. However, they are usually confined to very specific information sets, thus limiting them from seeing the broader picture. When frontline employees exchange knowledge with other roles, there is a chance that the context for their knowledge will be lost. According to Nonaka, that ambiguity or mistranslation of knowledge between roles is actually a good thing. It creates an opportunity for different roles to look at the information in a new light and question the status quo. Knowledge is born in chaos and it managements role to steer that chaos towards serendipity.
Senior management is on the quest for the ideal. They create a ‘conceptual umbrella’ that helps frame the expertise of the employees. They ask big questions like: what are we trying to learn? Where are we going? Who are we? What do we need to know? Senior management imbues the employees with a sense of direction by “setting the standards for justifying the value of knowledge”. It is their job to choose which efforts to support and explore. In the Knowledge-Creating company, this is not just ROI. Bioware may not be a profitable studio, but EA supports them because quality is where EA wants to be. Metrics for deciding the value of knowledge may include: does it fit within the company’s vision? Does it express the goals and strategies of senior management? Can it help build the knowledge network? The company’s vision should not be so clear as to be seen as an order. This could effect the commitment of employees who should be self-motivated in their work. This is an area where management can use metaphor and symbolism.
Teams are central in a Knowledge-Creating Company because they give individuals a shared context for interaction and engagement. Teams create new perspectives, pool and examine their information and eventually form a collective perspective. Conflict is good within teams because it can lead them to question the status quo and new perspectives. As team leaders, middle managers apply the vision of senior management to the chaos of the day to day. They are the junctions between the perpendicular flows of knowledge. They combine the tacit knowledge of both executives and frontline employees, make it explicit and apply it to products or technologies. As Nonaka writes these are the “knowledge engineers” within a knowledge-creating company.
Thoughts
Video Games are illusions that require complex tricks to execute properly. So, I think game development is a natural fit for Knowledge-Creation. In the bigger picture, I think the industry is missing many opportunities by leaving such a big knowledge gap between publishers and developers. It’s more important than ever for developers to be communicating with publishers and marketers about business and consumers. Of course a few companies are getting it right (like Valve, Naughty Dog, PopCap, surely others) and have enjoyed consistent, long-term success as a result of open knowledge environments.