The Temporal Dynamics of Knowledge Creation in the Information Society

Knowledge creation is playing an ever more central role in capitalist economies, and business organizations must constantly create new knowledge to guarantee survival. To be a competitive firm in the contemporary economy it is necessary to continually innovate. Industries and firms that formerly were in comfortably protected, slowly evolving markets are being swept into accelerated change. Nonaka and Takeuchi (1995) were, perhaps, the first authors to reflect on how knowledge is created, but, equally important, they zeroed in on the fundamental importance to today's firms of creating new knowledge or, put differently, of innovating. To compete, a firm must be transformed into an organization mobilized for knowledge creation. This paper reflects on the changing temporal dynamics of innovation on products, which are crystallizations of the state of knowledge in the firm at a particular moment. Products, released from the knowledge-creation process, become static, while the firm rushes into the future. With knowledge in its various manifestations as the increasing arbiter of value, innovation (i.e., new knowledge creation) has become the key to success in the global marketplace. The dedication of organizations and the increase in the number of organizations dedicated to continuous innovation are having profound effects on the world economy. Product development cycles are being shortened, and there is an acceleration of new product introduction. In the process, the market value of products is increasingly transient, and the length of the commercial usefulness of products is declining. At the heart of the transience of a product's value is the growing centrality of knowledge creation and innovation in the value-creation process. In the contemporary world economy, the value of the purely physical components and inputs such as raw materials is dropping while the value component, consisting of design and "software," is correspondingly increasing. As a result of this tendency, products are becoming "dematerialized." This tendency is most apparent in the electronics-related industries, such as personal computers, software, and data communications, but is no longer confined to high-technology sectors.