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November–December 1991

The Knowledge-Creating Company by Ikujiro Nonaka
Editor’s Note: This 1991 article helped popularize the notion of “tacit” knowledge – the valuable and highly subjective insights and intuitions that are difficult to capture and share because people carry them in their heads. Years later, the piece can still startle a reader with its views of organizations and of the types of knowledge that inform them. For example, the advice on how to distill objective and transferable, or “explicit,” knowledge from tacit knowledge – with a vivid illustration of Matsushita Electric’s efforts to build a better bread-making machine – is both arresting and actionable. The next step: ensuring that explicit knowledge is translated back into tacit knowledge that will then go on to yield yet another innovative solution.

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the one sure source of lasting competitive advantage is knowledge. When markets shift, technologies proliferate, competitors multiply, and products become obsolete almost overnight, successful companies are those that consistently create new knowledge, disseminate it widely throughout the organization, and quickly embody it in new technologies and products. These activities define the “knowledge-creating” company, whose sole business is continuous innovation. And yet, despite all the talk about “brainpower” and “intellectual capital,” few managers grasp the true nature of the knowledge-creating company – let alone know how to manage it. The reason: They misunderstand what knowledge is and what companies must do to exploit it.
N AN ECONOMY WHERE THE ONLY CERTAINTY IS UNCERTAINTY,

162 Harvard Business Review

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July–August 2007

hbr.org

Robert Meganck

MANAGING FOR THE LONG TERM

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BEST OF HBR

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The Knowledge-Creating Company

Deeply ingrained in the traditions of Western management, from Frederick Taylor to Herbert Simon, is a view of the organization as