Innovation and Knowledge Creation

This paper provides an overview of the predominant theory of organisational knowledge creation. This was first described comprehensively in the book ‘The Knowledge Creating Organisation’ by Nonaka and Takeuchi in 1995, but with its roots in an earlier HBR article from 1986 entitled ‘The New New Product Development Game’. This paper introduces the analogy of the game of rugby for team based knowledge creation and first uses the word scrum which was later picked up an used to name what is now the most widely used agile method. So agile and innovation have had a common root from their earliest days. The ability of an organisation to create new knowledge is essential to its innovation capability [1-5]. Nonaka, Toyama et al. [6] go further stating that “The raison d’etre of a firm is to continuously create knowledge”, Drucker [7] states that knowledge is “the only meaningful resource” while Adler [8] proposes that “knowledge creation.... reaches into the heart of the process of technological innovation”. Other research has demonstrated the relationship of knowledge management on organisational competencies and hence business performance. This so called “knowledge value chain” includes dimensions of strategy, management and operations [9]. Research also differentiates tacit and explicit knowledge in this regard, where it is proposed that “sustainability of competitive advantage . . . requires resources which are idiosyncratic . . . and not so easily transferable or replicable. The criteria point to knowledge (tacit knowledge in particular) as the most strategically important resource of the firm” [10]. The SECI framework assumes that organisations are knowledge creating entities, not merely information processing ones. This ability is necessary to be successful where there is constant change in business pressures and environment requiring continuous change and adaptation. New knowledge is essential for such adaptation, making organisational knowledge creation a necessary capability. Similarly, agility at both the team and organisational level are necessary and also assume constant change. Indeed, agile ISD methods aspire to ‘embrace’ such change for competitive advantage.