® IBM Software Group Introduction to BPMN Stephen A. White, BPM Architect, IBM October 16, 2006 © IBM Corporation IBM Software Group | WebSphere software Introduction ! This tutorial introduces business process modeling using the BPMN process modeling standard. This session will show how BPMN can support different methodologies as well as different modeling goals (e.g., orchestration and choreography), using actual business processes as examples. Sample business models will also be presented and explored to illustrate the main concepts and notational innovations. Two short exercises (on paper) will give students the feel of modeling with the major BPMN model elements. 2 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 3 IBM Software Group | WebSphere software Background What is Process Modeling? ! The capturing of an ordered sequence of business activities and supporting information !Business processes describe how a business pursues its objectives ! There are different levels of process modeling: !Process Maps – simple flow charts of the activities !Process Descriptions – flow charts extended with additional information, but not enough to fully define actual performance !Process Models – flow charts extended with enough information so that the process can be analyzed, simulated, and/or executed !BPMN supports each of these levels 4 IBM Software Group | WebSphere software Background What is BPMN? ! BPMN is flow-chart based notation for defining Business Processes No Receive Credit Report Approval Approve? Include History of Transactions Yes Include Standard Text ! BPMN is an agreement between multiple modeling tools vendors, who had their own notations, to use a single notation for the benefit of end-user understand and training ! BPMN provides a mechanism to generate an executable Business Process (BPEL) from the business level notation !A Business Process developed by a business analyst can be directly applied to a BPM engine instead of going through human interpretations and translations into other languages 5 IBM Software Group | WebSphere software Background Origins of BPMN ! The Business Process Management Institute (BPMI—now a part of the OMG) develops BPML (an XML process execution language) and realizes need for a graphical representation !BPML was later replaced by BPEL as the target execution language ! August, 2001, the Notation Working Group is formed. The group was composed of 35 companies, organizations, or individuals. ! BPMN 1.0 !May, 2004, the BPMN 1.0 specification was released to the public. !February, 2006, BPMN 1.0 was adopted as an OMG standard !Currently, there are 39 companies that have implementations of BPMN 6 IBM Software Group | WebSphere software Background A BPM Hourglass Audiences: Business Environment Purposes: BPMN Modeling Strategy Consultants Business Analysts Process Designers System Architects Intersection Point ! BP Scope ! BPEL Execution Software Engineers Technology Implementation Copyright © 2005, OMG 7 IBM Software Group | WebSphere software Background BPMN Development Drivers ! Must be acceptable and usable by the business community ! Must be able to generate executable processes (e.g., BPEL) through a BPMN Model (a combination of graphical elements and supporting information (attributes)) ! Although executable processes triggered the development of BPMN, it was expected that BPMN would be used for more general business purposes ! BPM is intended to be Methodology Agnostic ! Methodologies will give guidance as to the purpose and level of detail for modeling ! BPMN is as complex as it needs to be. Just use what you need… 8 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 9 IBM Software Group | WebSphere software BPMN Basic Concepts Diagram Elements Activities Events Gateways Connectors Back 10 IBM Software Group | WebSphere software BPMN Basic Concepts Diagram Elements, Cont. Connectors Events Sequence Flow Activities Message Flow Swimlanes Pool Name Flow Objects Gateways Association Name Name Name Lanes (within a Pool) Back 11 IBM Software Group | WebSphere software BPMN Basic Concepts Activities Sub-Process Task Looped Task ! An activity is work that is performed within a business process. An activity can be atomic or non-atomic (compound). The types of activities that are a part of a Process Model are: SubProcess, and Task ! Activities are rounded rectangles ! They can be performed once or can have internally defined loops 12 IBM Software Group | WebSphere software BPMN Basic Concepts Tasks ! A Task is an atomic activity that is included within a Process. A Task is used when the work in the Process is not broken down to a finer level of Process Model detail ! There are specialized types of Tasks for sending and receiving, or user-based Tasks, etc. ! Markers or icons can be added to Tasks to help identify the type of Task !Markers must not change the footprint of the Task or conflict with any other standard BPMN element Send Invoice Receive Doctor Request Fill Order 13 IBM Software Group | WebSphere software BPMN Basic Concepts Sub-Processes ! Sub-Processes enable hierarchical Process development ! A Sub-Process is a compound activity that is included within a Process. It is compound in that it can be broken down into a finer level of detail (a Process) through a set of sub-activities ! For a collapsed version of a Sub-Process, The details of the Sub-Process are not visible in the Diagram. A “plus” sign in the lower-center of the shape indicates that the activity is a Sub-Process and has a lower-level of detail. ! For an expanded version of a SubProcess, the details (a Process) are visible within its boundary. ! There are two types of Sub-Processes: Embedded and Independent (Re-usable) Collapsed SubProcess + Expanded Sub-Process No Receive Credit Report Approval Approve? Include History of Transactions Yes Include Standard Text 14 IBM Software Group | WebSphere software BPMN Basic Concepts Events Start Intermediate End ! An Event is something that “happens” during the course of a business process. These Events affect the flow of the Process and usually have a trigger or a result. They can start, interrupt, or end the flow ! Events are circles ! The type of boundary determines the type of Event 15 IBM Software Group | WebSphere software BPMN Basic Concepts Start Events ! Start Events indicate where a Process will begin ! There are different “Triggers” that indicate the specific circumstances that start the Process !None Start Events are used to mark the start of Sub-Processes or when the start is undefined !The Link Start Event will be removed in the next version of BPMN None Message Timer Rule Link Multiple !Any one of the Triggers included in a Multiple Start Event will start the Process 16 IBM Software Group | WebSphere software BPMN Basic Concepts Intermediate Events ! Intermediate Events occur after a process has been started and before a process is ended ! There are different “Triggers” that indicate the specific circumstances of the Event ! They can be placed in the normal flow of the Process or attached to the boundary of an activity None Message Timer Error Compensation Rule Link Multiple 17 IBM Software Group | WebSphere software BPMN Basic Concepts Intermediate Events (Normal Flow) ! Events that are placed within the process flow represent things that happen during the normal operations of the process ! They can represent the response to the Event (i.e., the receipt of a message) ! They can represent the creation of the Event (i.e., the sending of a message) Announce Issues for Vote Increment Tally Voting Response 18 IBM Software Group | WebSphere software BPMN Basic Concepts Intermediate Events (Attached to Boundary) ! Events that are attached to the boundary of an activity indicate that the activity should be interrupted when the Event is triggered !They can be attached to either Tasks or Sub-Processes ! They are used for error handling, exception handling, and compensation Receive Confirmation 2 Days Send Cancellation Notice 19 IBM Software Group | WebSphere software BPMN Basic Concepts End Events ! End Events indicates where a process will end ! There are different “Results” that indicate the specific circumstances that end the Process !None Start Events are used to mark the start of Sub-Processes or when the start is undefined !The Link End Event will be replaced in the next version of BPMN (probably with a Signal) None Message Error Compensation Link Terminate Multiple 20 IBM Software Group | WebSphere software BPMN Basic Concepts Gateways Exclusive Data-Based Event-Based Inclusive ! Gateways are modeling elements that are used to control how Sequence Flows interact as they converge and diverge within a Process ! All types of Gateways are diamonds ! Different internal markers indicate different types of behavior ! All Gateways both split and merge the flow Complex Parallel ! If the flow does not need to be controlled, then a Gateway is not needed. Thus, a diamond represents a place where control is needed 21 IBM Software Group | WebSphere software BPMN Basic Concepts Exclusive Gateways ! Exclusive Gateways (Decisions) are locations within a business process where the Sequence Flow can take two or more alternative paths. This is basically the “fork in the road” for a process. ! Only one of the possible outgoing paths can be taken when the Process is performed ! There are two types decision mechanism: ! Data (e.g., condition expressions) ! Events (e.g., the receipt of alternative messages) ! They are also used to merge Sequence Flow ! The merging behavior may change in the next version of BPMN 22 IBM Software Group | WebSphere software BPMN Basic Concepts Exclusive Gateways, Based on Data ! These are the most commonly used type of Gateways. !They can be shown with or without an internal “X” marker. Without is the most common use. ! The Gateway (Decision) creates alternative paths based on defined conditions Send Payment Problem No Payment OK? No, Exceeded Retry Limit Cancel Order Send Confirmation Yes Reject Offer Next Step? X Send No Accept Send Yes Offer 23 IBM Software Group | WebSphere software BPMN Basic Concepts Exclusive Gateways, Based on Events ! This type of Decision represents a branching point in the process where the alternatives are based on events that occurs at that point in the Process, rather than conditions ! The Multiple Intermediate Event is used to identify this Gateway ! The Event that follow the Gateway Diamond determine the chosen path !The first Event triggered wins Send Cancel No Send Invoice Yes Send Reminder 3 Days 24 IBM Software Group | WebSphere software BPMN Basic Concepts Inclusive Gateways ! Inclusive Gateways are Decisions where there is more than one possible outcome ! The “O” marker is used to identify this Gateway ! They are usually followed by a corresponding merging Inclusive Gateway Supplement A Documents Required? Supplement B Main Proposal Prepare Supplement A Prepare Supplement B Compilate Documents Prepare Main Proposal 25 IBM Software Group | WebSphere software BPMN Basic Concepts Complex Gateways Report from Sector A ! Complex Gateways are Decisions where there is more advanced definitions of behavior can be defined ! The asterisk marker is used to identify this Gateway ! Complex behavior can be defined for both the merging and splitting behavior Report from Sector B Review Reports? Report from Sector C Report from Sector D Report from Sector E 26 IBM Software Group | WebSphere software BPMN Basic Concepts Parallel Gateways ! Parallel Gateways are places in the Process where multiple parallel paths are defined !They are not required for forking in most situations. !They can be used for methodological purposes ! The “+” marker is used to identify this Gateway ! The Gateway is also used to synchronize (wait for) parallel paths Post Results on Web Site Prepare Results E-Mail Results of Vote Post Results on Web Site Prepare Results E-Mail Results of Vote Post Results on Web Site E-Mail Results of Vote 27 IBM Software Group | WebSphere software BPMN Basic Concepts Connectors Sequence Flow Message Flow Association ! A Sequence Flow is used to show the order that activities will be performed in a Process ! A Message Flow is used to show the flow of messages between two entities that are prepared to send and receive them ! An Association is used to associate data, information and artifacts with flow objects 28 IBM Software Group | WebSphere software BPMN Basic Concepts Sequence Flow ! A Sequence Flow is used to show the order that activities will be performed in a Process ! The source and target must be one of the following objects: Events, Activities, and Gateways ! A Sequence Flow cannot cross a Sub-Process boundary or a Pool boundary Send Invoice Receive Payment Accept Payment 29 IBM Software Group | WebSphere software BPMN Basic Concepts Conditional Sequence Flow ! A Sequence Flow MAY have a defined condition if it exits an activity !Such an activity must have at least two Sequence Flows ! The condition has to be True to allow the flow to continue down the Sequence Flow !A mini-diamond shows that the Sequence Flow has a condition ! At least one of the outgoing Sequence Flow must be chosen during Process performance Supplement A Required? Gather Requirements Supplement B Required? Main Proposal Prepare Supplement A Prepare Supplement B Prepare Main Proposal 30 IBM Software Group | WebSphere software BPMN Basic Concepts Default Sequence Flow ! A Sequence Flow that exits an Exclusive or Inclusive Gateway may be defined as being the default path !A hatch mark at the line beginning shows the default Sequence Flow ! The default path is chosen only if all the other conditions of the Gateway are False No Payment OK? No, Exceeded Retry Limit Yes Send Payment Problem Cancel Order Send Confirmation 31 IBM Software Group | WebSphere software BPMN Basic Concepts Wage Employee ! A Message Flow is used to show the flow of messages between two Participants of Process !In BPMN, separate Pools are used to represent the Participants ! A Message Flow can connect to the boundary of the Pool or to an object within the Pool ! Message Flow are not allowed between objects within a single Pool Company Message Flow 32 IBM Software Group | WebSphere software BPMN Basic Concepts Associations ! An Association is used to associate objects to one another (such as Artifacts and Activities) ! Associations are used to show how data is input to and output from Activities ! Text Annotations can be Associated with objects Order [Approved] Fulfill Order Order Review and Approved? Approve Order Reject Order From “Commercial Placement” Prep for Insurance Carrier 33 IBM Software Group | WebSphere software BPMN Basic Concepts Swimlanes ! BPMN uses the concept known as “swimlanes” to help partition and/organize activities ! There are two main types of swimlanes: Pool and Lane !Pools represent Participants in an interactive (B2B) Business Process Diagram Patient !Lanes represent sub-partitions for the objects within a Pool Send Doctor Request Receive Appt. Receive Prescription Pickup Send Symptoms Illness Occurs Send Medicine Request Receive Medicine 10) Here is your medicine Receptionist Receive Doctor Request 9) need my medicine 5) Go see doctor Send Availability Request Receive Doctor Availability 6) I feel sick Send Booking Send Appt. 8) Pickup your medicine and you can leave Receive Prescription Preparation Provide Medicine Receive Medicine Request Send Medicine 2) Are you available? 7) Prepare this medicine 4) I'll book you 3) I'm available Doctor Doctor’s Office 1) I want to see doctor Receive Availability Request Send Doctor Availability Receive Booking Receive Symptoms Send Prescription Preparation Send Prescription Pickup 34 IBM Software Group | WebSphere software BPMN Basic Concepts ... Receive ... PO Message Seller ! Pools represent Participants in an interactive (B2B) Business Process Diagram !A Participant may be a business role (e.g., “buyer” or “seller”) or may a business entity (e.g., “IBM” or “OMG”) ! A Pool may be a “black box” or may contain a Process ! Interaction between Pools is handled through Message Flow ! Sequence Flow cannot cross the boundary of a Pool (i.e., a Process is fully contained within a Pool) Buyer Pools Order ... Send ... 35 IBM Software Group | WebSphere software BPMN Basic Concepts Management Web Server ! Lanes represent subpartitions for the objects within a Pool ! They often represent organization roles (e.g., Manager, Associate), but can represent any desired Process characteristic ! Sequence Flow can cross Lane boundaries Administration Lanes Purchase Info Prepare PO Cancel Order Approval Request Email Approve Request Approved ? Cancel Order Yes Dispatch to Approver 36 IBM Software Group | WebSphere software BPMN Basic Concepts Artifacts ! Artifacts provide the capability to show information beyond the basic flow-chart structure of the Process ! There are currently three standard Artifacts in BPMN: Data Objects, Groups, and Annotations !Additional Artifacts may be standardized in later version !Sets of vertical market Artifacts may also be developed ! A modeler or tool can extend BPMN by defining new Artifacts 37 IBM Software Group | WebSphere software BPMN Basic Concepts Text Annotations ! Text Annotations are a mechanism for a modeler to provide additional information about a Process ! Text Annotations can be connected to a specific object on the Diagram with an Association From “Commercial Placement” Prep for Insurance Carrier 38 IBM Software Group | WebSphere software BPMN Basic Concepts Data Objects ! Data Objects are Artifacts that are used to show how data and documents are used within a Process ! Data Objects can be used to define inputs and outputs of activities ! Data Objects can be given a “state” that shows how a document may be changed or updated within the Process Order [Approved] Review and Approve Order Fulfill Order Order Approved? Reject Order Order [Rejected] 39 IBM Software Group | WebSphere software BPMN Basic Concepts Groups ! Groups are Artifacts that are used to highlight certain sections of a Diagram without adding additional constraints for performance – as a Sub-Process would !Groups can be used to categorize elements for reporting purposes ! Groups are not constrained by restrictions of Pools and Lanes 40 IBM Software Group | WebSphere software BPMN Basic Concepts Artifacts are Extendible ! Modelers and Modeling Tools can add new Artifacts to a diagram !Specific industries or markets may have their own set of Artifacts ! Their shapes must not conflict with existing shapes ! They are not part of normal flow, but can be associated with other elements Generate Code Code Artifact 41 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 42 IBM Software Group | WebSphere software Exercise 1 ! In this exercise you will given a set of short answer questions that cover the basic BPMN elements ! Some questions will require a written answer and some will require a (simple) drawn answer 43 IBM Software Group | WebSphere software Exercise 1 Questions: Set 1 ! What is the difference between a Task and a SubProcess? ! Show a Task with a timeout and the follow-up to the timeout ! What are the main restrictions for Sequence Flow? 44 IBM Software Group | WebSphere software Exercise 1 Questions: Set 2 ! What are the rules for Message Flow connections? ! Draw two ways that data can be output from one Task and then input into another Task ! Why do the different behaviors of the Gateways share the same basic diamond shape? 45 IBM Software Group | WebSphere software Exercise 1 Questions: Set 3 ! How can Artifacts be used to enhance the information content of a BPMN diagram? ! Draw a timed delay in a process ! What do Pools represent? 46 IBM Software Group | WebSphere software Exercise 1 Questions: Set 4 ! What’s the difference between Exclusive and Inclusive Gateways? ! Draw the synchronization of two parallel paths ! What do Lanes generally represent? And what can they represent? 47 IBM Software Group | WebSphere software Exercise 1 Questions: Set 5 ! How to Associations affect the main flow of a Process? ! Draw a Message Flow between one “white box” Participant and one “black box” Participant ! What are the rules for adding marker or icons to activities? 48 IBM Software Group | WebSphere software Exercise 1 Answers: Set 1 ! What is the difference between a Task and a Sub-Process? !A Sub-Process can be broken down into a lower level detail (another Process) while a Task cannot ! Show a Task with a timeout and the followup to the timeout !See figure to the right ! What are the main restrictions for Sequence Flow? !A Sequence Flow cannot cross the boundary of a Sub-Process or the boundary of a Pool Receive Confirmation 2 Days Send Cancellation Notice 49 IBM Software Group | WebSphere software Exercise 1 Answers: Set 2 ! What are the rules for Message Flow connections? ! They must connect from the boundary or object within a Pool to the boundary or object within a different Pool ! Draw two ways that data can be output from one Task and then input into another Task ! See figures to the right ! Why do the different behaviors of the Gateways share the same basic diamond shape? ! Gateways represent a controlling mechanism for Sequence Flow. A diamond in the model shows a place where Sequence Flow control is needed Research Notes Research the Topic Write Text Research Notes Research the Topic Write Text 50 IBM Software Group | WebSphere software Exercise 1 Answers: Set 3 ! How can Artifacts be used to enhance the information content of a BPMN diagram? ! New Artifacts can be created and added to the diagram to allow visualization of key model factors ! Draw a timed delay in a process Announce Issues for ! See figure to the right Discussion ! What do Pools represent? ! Participants in a Process diagram, either a specific entity (e.g., FedEx) or a business role (e.g., Shipper) Wait 6 Days E-Mail Discussion Deadline Warning 51 IBM Software Group | WebSphere software Exercise 1 Answers: Set 4 ! What’s the difference between Exclusive and Inclusive Gateways? ! Only one outgoing path is chosen for Exclusive Gateway while at least one to all outgoing paths may be chosen for an Inclusive Gateway ! Draw the synchronization of two parallel paths ! See figure to the right ! What do Lanes generally represent? And what can they represent? ! The mostly are used to represent organizational roles (e.g., Associate) or departments (e.g., Finance). The can represent most any object attribute that the modeler wants to use to partition activities Ship Order Accept Payment 52 IBM Software Group | WebSphere software Exercise 1 Warning HR Department ! How to Associations affect the main flow of a Process? ! They don’t. They can only affect the requirements for an activity ! Draw a Message Flow between one “white box” Participant and one “black box” Participant ! See figure to the right ! What are the rules for adding marker or icons to activities? ! The marker or icon cannot change the footprint of the activity and cannot conflict with any standard BPMN element Employee Answers: Set 5 ... Send PW Expiration Warning ... 53 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 54 IBM Software Group | WebSphere software BPMN Additional Concepts Normal Flow ! Normal Sequence Flow refers to the flow that originates from a Start Event and continues through activities via alternative and parallel paths until it ends at an End Event !Normal Flow does not include exception flow or compensation flow Include No Receive Credit Report Approval Approve? History of Transactions Yes Include Standard Text 55 IBM Software Group | WebSphere software BPMN Additional Concepts Link Events Within a Process ! Link Events can be used for Off-Page connectors ! Link Events can be used as “Go-To” objects Produce Assemblies Create Order Confirmation A Create Invoice Capacity & Parts Available Receive Order from Customer Send Assemblies & Invoice to Customer Send Confirmation to Customer Check if Manf. Capacity & Parts Available Send Rejection to Customer Capacity not Available Some Parts Unavailable Order Arrives Capacity OK, Parts Must be Ordered Procure Parts Parts Procured A 56 IBM Software Group | WebSphere software BPMN Additional Concepts Process Levels ! Processes can be developed hierarchically, with multiple levels through Sub-Processes ! Sequence Flow cannot cross a Sub-Process boundary !Message Flow and Associations can cross SubProcess boundaries Check Credit No Include History of Transactions Receive Request Continue Order... Receive Credit Report Approval Approve? Yes Include Standard Text 57 IBM Software Group | WebSphere software BPMN Additional Concepts Data Flow Association 1 Association 2 Data Object Data Object Association Seq 1 Task 1 Seq 1 Task 2 Seq 2 Task 1 Task 2 Seq 3 Start Event Start Event Seq 3 Seq 2 End Event End Event Sequence Flow and Data Flow are decoupled They can be bound together Exclusive Seq 1 Task 1 Yes Seq 2 Task 2 Seq 5 Seq 3 Start Event End Event No Association 1 Seq 7 Seq 4 Task 3 Seq 6 Task 4 Association 2 Data Object Use case for decoupling 58 IBM Software Group | WebSphere software BPMN Additional Concepts Exception Handling Electrical Design No Design OK? Locate and Reuse Designs Review Previous Designs Update Electrical Design Test Electrical Design Yes New Electrical Design Update Plan (Electrical) Electrical Design [Revised] Physical Design [Draft] Electrical Design [Draft] Restart Electrical Design New Physical Design Intermediate Events attached to the boundary of an activity represent triggers that can interrupt the activity. All work within the activity will be stopped and flow will proceed from the Event. Timer, Errors, Messages, etc. can be Triggers. 59 IBM Software Group | WebSphere software BPMN Additional Concepts Compensation and Transactions ! A Transaction is an activity that has a double border. Transactions are supported by a transaction protocol (e.g., WS-Transaction) ! Normal Outgoing Sequence Flow represents the path to follow a successful completion ! A Cancel Intermediate Event represents the path to follow a cancelled completion ! An Exception Intermediate Event represents the path to follow a transaction hazard (but no compensation is performed) ! Activities used for compensate (with marker) are outside normal flow and are Associated normal activities. Compensation flows “backwards.” 60 IBM Software Group | WebSphere software BPMN Additional Concepts Looping Task = Task Activity Looping: Do-While; While-Do; Multiple Instance Configure Product Test Product Pass Test? Yes Package Product No Sequence Flow Looping 61 IBM Software Group | WebSphere software BPMN Additional Concepts Timers Receive Confirmation Announce Issues for Discussion Delay 6 days from Announcement E-Mail Discussion Deadline Warning Timers to add delays in the Process 2 Days Send Cancellation Notice Timeouts for exception handling 62 IBM Software Group | WebSphere software BPMN Additional Concepts Ad-Hoc Processes Write a Book Chapter Edit Text Research Notes Research the Topic Topic Write Text Graphic [completed] Chapter Text [draft] Generate Graphics Include Graphics in Text Finalize Chapter Organize References References Chapter [completed] There is no pre-defined Sequence Flow 63 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 64 IBM Software Group | WebSphere software Process Modeling Methodologies ! BPMN is intended to be methodology independent !Simple or complex diagrams can be created based on the chosen methodology !Methodologies determine what information is captured about a process ! Many different methodologies can be used for modeling with BPMN !Some may require extended Artifacts ! Examples of methodologies: !LOVeM, EPCs, RAD methodology, IDEF !Consulting organization methodologies 65 IBM Software Group | WebSphere software Process Modeling Methodologies Example of EPC Modeled in BPMN Perform Credit Check ^ ^ Order Accepted Accept Order Inform Distribution Analyze Order Accept Order Validate Order Order Validated XOR Inform Customer Reject Order Perform Credit Check Accept Validate Order Accept Order Accept or Reject? Accept Order Analyze Order Order Accepted Inform Distribution Order Validated Reject Reject Order Inform Customer 66 IBM Software Group | WebSphere software Process Modeling Methodologies General Modeling Concepts ! A process is chronological. Accurate models should be oriented on a time line (in general, from left to right in sequence) ! Processes generally begin with triggering events, and work their way through to significant business results ! They can also represent smaller segments of re-usable work ! All tasks or activities are assigned to roles that are meaningful to people in the business. Be sure you have captured all relevant roles, which may sometimes be outside of the client’s company ! A complete model should display how objects or data (or both) are transferred and where they are going ! A process can be modeled in a hierarchical fashion (e.g., with Sub-Processes) ! The choices made for decisions, which occur within a process, determine which of all potential paths will be taken 67 IBM Software Group | WebSphere software Process Modeling Methodologies General Modeling Guidelines ! Establish organization standards or guidelines for developing models and naming model elements, e.g., ! Establish naming conventions for each type of modeling object. For example, all activity names could have the following format • verb + (adjective/descriptor) + noun • example: “Verify Account” ! Avoid redundancy in naming, e.g., do not include the word Process in the Process names or the words Task or Activity in Task names ! To help with report outputs, names should be 32 characters or less ! To help with readability, all words should be capitalized ! Establish a set of standard nouns, verbs, and acronyms that are used for naming objects ! Establish standards for versioning methods associated at the process model and artifact level to provide requirement traceability 68 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 69 IBM Software Group | WebSphere software Orchestration vs. Choreography ! Orchestration: Workflow, internal processes, private processes !Contained within one Pool ! Choreography: Collaboration, global processes, B2B processes !Defined by the interaction between Pools 70 IBM Software Group | WebSphere software Orchestration vs. Choreography Orchestration ! Orchestration defines processes that are internal to a specific organization !Thus, they are contained within a single Pool Supplier Rejected Receive Order Accepted or Rejected? Ship Order Accepted Fill Order Close Order Send Invoice Make Payment Accept Payment 71 IBM Software Group | WebSphere software Orchestration vs. Choreography Send Doctor Request Send Symptoms Receive Appt. Receive Prescription Pickup Send Medicine Request Receive Medicine Illness Occurs 6) I feel sick 8) Pickup your medicine and you can leave 10) Here is your medicine 1) I want to see doctor 9) need my medicine 5) Go see doctor Receptionist/ Doctor ! A Choreography process depicts the interactions between two or more business entities (as modeled with Pools) !Shown by the Message Flow between the Pools Patient Choreography Receive Doctor Request Send Appt. Receive Symptoms Send Prescription Pickup Receive Medicine Request Send Medicine ! Or a sequence of interaction (global) types of activities ! BPMN V2.0 will likely update how Choreographies are modeled Illness Occurs Request Doctor Arrange Appt. Evaluate Symptoms Arrange Prescription Pickup Fill Prescription Pick-up Prescription 72 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 73 IBM Software Group | WebSphere software Exercise 2 – Create a Process for Expense Reimbursement ! In this exercise you will read a text descriptive information about a process and will map the process on paper ! The process is a sample expense reimbursement process: !This process provides for reimbursement of expenses incurred by employees for the company. For example buying a technical book, office supplies or software. In a normal day there are several hundreds of instances of this process created. ! Concentrate on the basic flow of the Process… 74 IBM Software Group | WebSphere software Exercise 2 Process Information: Expense Reimbursement ! After the Expense Report is received, a new account must be created if the employee does not already have one ! The report is then reviewed for automatic approval ! Amounts under $200 are automatically approved ! Amounts equal to or over $200 require approval of the supervisor • In case of rejection, the employee must receive a rejection notice by email ! The reimbursement goes to the employee’s direct deposit bank account ! If no action has happened in 7 days, then the employee must receive an approval in progress email ! If the request is not finished within 30 days, then the process is stopped and the employee receives an email cancellation notice and must re-submit the expense report 75 IBM Software Group | WebSphere software Exercise 2 Expense Reimbursement Process 7 Days No Account Exists? Receive Expense Report Send Approval in Progress email to submitter 23 Days Send e-mail cancellation notice to submitter Create Expense Account Yes Review for Pre-Approval PreApproved? Amount < $200 Auto-Approve Expense Account Transfer Money to Employee’s Bank Approved Otherwise Approval Review by Supervisor Approved? Rejected Notify Employee of Rejection 76 IBM Software Group | WebSphere software Topics ! BPMN Background ! Basic Concepts ! Exercise 1 ! Additional Concepts ! Process Modeling Methodologies ! Orchestration vs. Choreography ! Exercise 2 ! Summary 77 IBM Software Group | WebSphere software Summary ! This tutorial covered: !The background of BPMN !Basic BPMN Concepts !Additional BPMN Concepts !Process Modeling Methodologies !Orchestration and Choreography !Two Exercises 78 A Dynamic Theory of Organizational Knowledge Creation Author(s): Ikujiro Nonaka Reviewed work(s): Source: Organization Science, Vol. 5, No. 1 (Feb., 1994), pp. 14-37 Published by: INFORMS Stable URL: http://www.jstor.org/stable/2635068 . Accessed: 25/01/2012 12:33 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. INFORMS is collaborating with JSTOR to digitize, preserve and extend access to Organization Science. http://www.jstor.org A Dynamic Theory Knowledge of Organizational Creation IkujiroNonaka Institute of Business Research, Hitotsubashi University, Kunitachi, Tokyo, Japan I recommend this paper to Organization Science readers because I believe that it has the potential to stimulate the next wave of research on organization learning. It provides a conceptual framework for research on the differences and similarities of learning by individuals, groups, and organizations. Arie Y. Lewin Abstract This paper proposes a paradigmfor managingthe dynamic aspects of organizationalknowledge creating processes. Its central theme is that organizationalknowledge is created through a continuous dialogue between tacit and explicit knowledge.The natureof this dialogueis examinedand four patternsof interactioninvolvingtacit and explicitknowledge are identified. It is argued that while new knowledge is developedby individuals,organizationsplay a criticalrole in articulatingand amplifyingthat knowledge. A theoretical frameworkis developed which provides an analyticalperspective on the constituent dimensions of knowledge creation. This frameworkis then applied in two operational models for facilitatingthe dynamiccreation of appropriate organizationalknowledge. (Self-Designing Organization; Teams; Knowledge Conversion; Organizational Innovation; Management Models) 1. Introduction It is widely observed that the society we live in has been gradually turning into a "knowledge society" (Drucker 1968; Bell 1973; Toffler 1990). The ever increasing importance of knowledge in contemporary society calls for a shift in our thinking concerning innovation in large business organizations-be it technical innovation, product innovation, or strategic or organizational innovation.' It raises questions about how organizations process knowledge and, more importantly, how they create new knowledge. Such a shift in general orientation will involve, among other things, a reconceptualization of the organizational knowledge creation processes. 14 ORGANIZATION SCIENCE/ Vol. 5, No. 1, February 1994 The theory of organization has long been dominated by a paradigm that conceptualizes the organization as a system that 'processes' information or 'solves' problems. Central to this paradigm is the assumption that a fundamental task for the organization is how efficiently it can deal with information and decisions in an uncertain environment. This paradigm suggests that the solution lies in the 'input-process-output' sequence of hierarchical information processing. Yet a critical problem with this paradigm follows from its passive and static view of the organization. Information processing is viewed as a problem-solving activity which centers on what is given to the organization-without due consideration of what is created by it. Any organization that dynamically deals with a changing environment ought not only to process information efficiently but also create information and knowledge. Analyzing the organization in terms of its design and capability to process information imposed by the environment no doubt constitutes an important approach to interpreting certain aspects of organizational activities. However, it can be argued that the organization's interaction with its environment, together with the means by which it creates and distributes information and knowledge, are more important when it comes to building an active and dynamic understanding of the organization. For example, innovation, which is a key form of organizational knowledge creation, cannot be explained sufficiently in terms of information processing or problem solving. Innovation can be better understood as a process in which the organization creates and defines problems and then actively develops new knowledge to solve them. Also, innovation produced by one part of the organization in 1047-7039/94/0501/0014/$01.25 Copyright ? 1994. The Institute of Management Sciences IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation turn creates a stream of related information and knowledge, which might then trigger changes in the organization's wider knowledge systems. Such a sequence of innovation suggests that the organization should be studied from the viewpoint of how it creates information and knowledge, rather than with regard to how it processes these entities. The goal of this paper is to develop the essential elements of a theory of organizational knowledge creation. In the sections which follow, the basic concepts and models of the theory of organizational knowledge creation are presented. Based on this foundation, the dynamics of the organizational knowledge creation process are examined and practical models are advanced for managing the process more effectively. 2. Basic Concepts and Models of Organizational Knowledge Creation The following subsections explore some basic constructs of the theory of organizational knowledge creation. They begin by discussing the nature of information and knowledge and then draw a distinction between "tacit" and "explicit" knowledge. This distinction represents what could be described as the epistemological dimension to organizational knowledge creation. It embraces a continual dialogue between explicit and tacit knowledge which drives the creation of new ideas and concepts. Although ideas are formed in the minds of individuals, interaction between individuals typically plays a critical role in developing these ideas. That is to say, "communities of interaction" contribute to the amplification and development of new knowledge. While these communities might span departmental or indeed organizational boundaries, the point to note is that they define a further dimension to organizational knowledge creation, which is associated with the extent of social interaction between individuals that share and develop knowledge. This is referred to as the "ontological" dimension of knowledge creation. Following a consideration of the two dimensions of knowledge creation, some attention is given to the role of individuals and, more specifically, to their "commitment" to the knowledge creating process. This covers aspects of their "intention," the role of autonomy, and the effects of fluctuations or discontinuities in the organization and its environment. Next, a "spiral" model of knowledge creation is proposed which shows the relationship between the ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 epistemological and ontological dimensions of knowledge creation. This spiral illustrates the creation of a new concept in terms of a continual dialogue between tacit and explicit knowledge. As the concept resonates around an expanding community of individuals, it is developed and clarified. Gradually, concepts which are thought to be of value obtain a wider currency and become crystalized. This description of the spiral model is followed by some observations about how to support the practical management of organizational knowledge creation. 2.1. Knowledge and Information Knowledge is a multifaceted concept with multilayered meanings. The history of philosophy since the classical Greek period can be regarded as a never-ending search for the meaning of knowledge.2 This paper follows traditional epistemology and adopts a definition of knowledge as "justified true belief." It should be noted, however, that while the arguments of traditional epistemology focus on "truthfulness" as the essential attribute of knowledge, for present purposes it is important to consider knowledge as a personal "belief," and emphasize the importance of the "justification" of knowledge. This difference introduces another critical distinction between the view of knowledge of traditional epistemology and that of the theory of knowledge creation. While the former naturally emphasizes the absolute, static, and nonhuman nature of knowledge, typically expressed in propositional forms in formal logic, the latter sees knowledge as a dynamic human process of justifying personal beliefs as part of an aspiration for the "truth." Although the terms "information" and "knowledge" are often used interchangeably, there is a clear distinction between information and knowledge. According to Machlup (1983), information is a flow of messages or meanings which might add to, restructure or change knowledge. Dretske (1981) offers some useful definitions. In his words: Information is that commodity capable of yielding knowledge, and what information a signal carries is what we can learn from it (Dretske 1981, p. 44). Knowledge is identified with information-produced (or sustained) belief, but the information a person receives is relative to what he or she already knows about the possibilities at the source (ibid, p. 86). In short, information is a flow of messages, while knowledge is created and organized by the very flow of information, anchored on the commitment and beliefs of its holder. This understanding emphasizes an essential aspect of knowledge that relates to human action. 15 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation The importance of knowledge related to action has been recognized in the area of artificial intelligence. For example, Gruber (1989) addresses the subject of an expert's "strategic knowledge" as that which directly guides his action, and attempts to develop the tools to acquire it. Since the 1980s, the development of cognitive science has been based on a serious reflection on behavioralist psychology's neglect of such traditional questions as, 'Why do human beings act in a certain way?', which was a central issue for so-called "folk psychology" (Stich 1986). Searle's discussion on the "speech act" also points out a close relationship between language and human action in terms of the "intention" and "commitment" of speakers (Searle 1969). In sum, as a fundamental basis for the theory of organizational creation of knowledge, it can be argued that attention should be focused on the active, subjective nature of knowledge represented by such terms as "belief" and "commitment" that are deeply rooted in the value systems of individuals. The analysis of knowledge and information does not stop at this point. Information is a necessary medium or material for initiating and formalizing knowledge and can be viewed from "syntactic" and "semantic" perspectives. The syntactic aspect of information is illustrated by Shannon's analysis of the volume of information which is measured without regard to its meaning or value. A telephone bill, for example, is not calculated on the basis of the content of a conversation but according to the duration of time and the distance involved. Shannon said that the semantic aspects of communication, which center on the meaning of information, are irrelevant to the engineering problem (Shannon and Weaver 1949). A genuine theory of information would be a theory about the content of our messages, not a theory about the form in which this content is embodied (Dretske 1981). In terms of creating knowledge, the semantic aspect of information is more relevant as it focuses on conveyed meaning. The syntactic aspect does not capture the importance of information in the knowledge creation process. Therefore, any preoccupation with the formal definition will tend to lead to a disproportionate emphasis on the role of information processing, which is insensitive to the creation of organizational knowledge out of the chaotic, equivocal state of information. Information, seen from the semantic standpoint, literally means that it contains new meaning. As Bateson (1979, p. 5) put it, "information consists of differences that make a difference." This insight provides a new point of view for interpreting events that make previously invisible connections or ideas obvious or shed 16 light on unexpected connections (Miyazaki and Ueno 1985). For the purposes of building a theory of knowledge creation, it is important to concentrate on the semantic aspects of information. 2.2. Two Dimensions of KnowledgeCreation Although a great deal has been written about the importance of knowledge in management, relatively little attention has been paid to how knowledge is created and how the knowledge creation process can be managed. One dimension of this knowledge creation process can be drawn from a distinction between two types of knowledge-"tacit knowledge" and explicit knowledge." As Michael Polanyi (1966, p. 4) put it, "We can know more than we can tell".3 Knowledge that can be expressed in words and numbers only represents the tip of the iceberg of the entire body of possible knowledge. Polanyi classified human knowledge into two categories. "Explicit" or codified knowledge refers to knowledge that is transmittable in formal, systematic language. On the other hand, "tacit" knowledge has a personal quality, which makes it hard to formalize and communicate. Tacit knowledge is deeply rooted in action, commitment, and involvement in a specific context. In Polanyi's words, it "indwells" in a comprehensive cognizance of the human mind and body. While Polanyi articulates the contents of tacit knowledge in a philosophical context, it is also possible to expand his idea in a more practical direction. Tacit knowledge involves both cognitive and technical elements. The cognitive elements center on what Johnson-Laird (1983) called "mental models" in which human beings form working models of the world by creating and manipulating analogies in their minds. These working models include schemata, paradigms, beliefs, and viewpoints that provide "perspectives" that help individuals to perceive and define their world. By contrast, the technical element of tacit knowledge covers concrete know-how, crafts, and skills that apply to specific contexts. It is important to note here that the cognitive element of tacit knowledge refers to an individual's images of reality and visions for the future, that is to say, what is and what ought to be. As will be discussed later, the articulation of tacit perspectivesin a kind of "mobilization" process-is a key factor in the creation of new knowledge. Tacit knowledge is a continuous activity of knowing and embodies what Bateson (1973) has referred to as an "analogue" quality. In this context, communication between individuals may be seen as an analogue pro- ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation cess that aims to share tacit knowledge to build mutual understanding. This understanding involves a kind of "parallel processing" of the complexities of current issues, as the different dimensions of a problem are processed simultaneously. By contrast, explicit knowledge is discrete or "digital." It is captured in records of the past such as libraries, archives, and databases and is assessed on a sequential basis. The Ontological Dimension: The Level of Social Interaction. At a fundamental level, knowledge is created by individuals. An organization cannot create knowledge without individuals. The organization supports creative individuals or provides a context for such individuals to create knowledge. Organizational knowledge creation, therefore, should be understood in terms of a process that "organizationally" amplifies the knowledge created by individuals, and crystallizes it as a part of the knowledge network of organization. In this line, it is possible to distinguish several levels of social interaction at which the knowledge created by an individual is transformed and legitimized. In the first instance, an informal community of social interaction provides an immediate forum for nuturing the emergent property of knowledge at each level and developing new ideas. Since this informal community might span organizational boundaries-for example, to include suppliers or customers-it is important that the organization is able to integrate appropriate aspects of emerging knowledge into its strategic development. Thus, the potential contribution of informal groups to organizational knowledge creation should be related to more formal notions of a hierarchical structure. If this is done effectively, new knowledge associated with more advantageous organizational processes or technologies will be able to gain a broader currency within the organization. In addition to the creation of knowledge within an organization, it is also possible that there will be formal provisions to build knowledge at an interorganizational level. This might occur if informal communities of interaction, that span the link between customers, suppliers, distributors, and even competitors, are put on a more formal basis, for example, through the formation of alliances or outsourcing. 2.3. Commitment on the Part of the Knowledge Subject: Intention, Autonomy, and Fluctuation The prime movers in the process of organizational knowledge creation are the individual members of an organization. Individuals are continuously committed to recreating the world in accordance with their own ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 perspectives. As Polanyi noted, "commitment" underlies human knowledge creating activities. Thus, commitment is one of the most important components for promoting the formation of new knowledge within an organization. There are three basic factors that induce individual commitment in an organizational setting: "intention," and "autonomy," and a certain level of environmental "fluctuation." Intention. Intention is concerned with how individuals form their approach to the world and try to make sense of their environment. It is not simply a state of mind, but rather what might be called an action-oriented concept. Edmund Husserl (1968) called this attitude on the part of the subject "intentionality." He denied the existence of "consciousness" per se, which was generally assumed by psychologists in 19th century, and argued that consciousness arises when a subject pays attention to an object. In other words, any consciousness is a 'consciousness of something.' It arises, endures, and disappears with a subject's commitment to an object. Eigen (1971) argued, in his evolutionary theory, that evolution involves the process of acquiring environmental information for better adaptation. Eigen insisted that the degree of meaningfulness of information, or a value parameter, needs to be introduced to explain this system. Human beings, as organic systems, derive meaning from the environment which is based on their ultimate pursuit of survival (Shimizu 1978). Man cannot grasp the meaning of information about his environment without some frame of value judgment. The meaning of information differs according to what a particular system aims to do (manifest purpose or problem consciousness) and the broader environment in which that system exits (context). It is more concerned with the system's future aspirations than its current state. Weick (1979) explains this "self-fulfilling prophecy" of a system as the "enactment" of the environment, which may be a projection of its strong will for self-actualization. While mechanistic information-processing models treat the mind as a fixed capacity device for converting meaningless information into conscious perception, in reality cognition is the activity of knowing and understanding as it occurs in the context of purposeful activity (Neisser 1976). Intention becomes apparent against this background. Without intention, it would be impossible to judge the value of the information or knowledge perceived or created. "The intentionality of the mind not only creates the possibility of meaning, but also limits its form" (Searle 1983, p. 166). 17 IKUJIRO NONAKA Dynamic Theory of Organizational Knowledge Creation Autonomy. The principle of autonomy can be applied at the individual, group, and organizational levels -either separately or all together. However, the individual is a convenient starting point for analysis. Individuals within the organization may have different intentions. Every individual has his or her own personality. By allowing people to act autonomously, the organization may increase the possibility of introducing unexpected opportunities of the type that are sometimes associated with the so-called "garbage can" metaphor (Cohen et al. 1972). From the standpoint of creating knowledge, such an organization is more likely to maintain greater flexibility in acquiring, relating, and interpreting information. In a system where the autonomy of individuals is assured, or where only "minimum critical specification" (Morgan 1986) is intended, it is possible to establish a basis for self-organization. Individual autonomy widens the possibility that individuals will motivate themselves to form new knowledge. Self-motivation based on deep emotions, for example, in the poet's creation of new expressions, serves as a driving force for the creation of metaphors. A sense of purpose and autonomy becomes important as an organizational context. Purpose serves as the basis of conceptualization. Autonomy gives individuals freedom to absorb knowledge. Fluctuation. Even though intention is internal to the individual, knowledge creation at the individual level involves continuous interaction with the external world. In this connection, chaos or discontinuity can generate new patterns of interaction between individuals and their environment. Individuals recreate their own systems of knowledge to take account of ambiguity, redundancy, noise, or randomness generated from the organization and its environment. These fluctuations differ from complete disorder and are characterized by "order without recursiveness"-which represents an order where the pattern is hard to predict in the beginning (Gleick 1987). Winograd and Flores (1986) emphasize the role of periodic "breakdowns" in human perception. Breakdown refers to the interruption of an individual's habitual, comfortable 'state-of-being.' When breakdowns occur, individuals question the value of habits and routine tools, which might lead to a realignment of commitments. Environmental fluctuation often triggers this breakdown. When people face such a breakdown or contradiction, they have an opportunity to reconsider their fundamental thinking and perspectives. In other words, they begin to question the validity of basic attitudes toward the world. This process necessarily 18 involves deep personal commitment by the individual and is similar in context to Piaget's (1974) observations about the importance of the role of contradiction in the interaction between the subject and its environment in such a way that the subject forms perceptions through behavior. 2.4. KnowledgeConversion and the Spiral of Knowledge It is now possible to bring together the epistemological and ontological dimensions of knowledge creation to form a "spiral" model for the processes involved. This involves identifying four different patterns of interaction between tacit and explicit knowledge. These patterns represent ways in which existing knowledge can be "converted" into new knowledge. Social interaction between individuals then provides an ontological dimension to the expansion of knowledge. The idea of "knowledge conversion" may be traced from Anderson's ACT model (Anderson 1983) developed in cognitive psychology. In the ACT model, knowledge is divided into "declarative knowledge" (actual knowledge) that is expressed in the form of propositions and "procedural knowledge" (methodological knowledge) which is used in such activities as remembering how to ride a bicycle or play the piano. In the context of the present discussion, the former might approximate to explicit knowledge and the latter to tacit knowledge. Anderson's model hypothesizes that declarative knowledge has to be transformed into procedural knowledge in order for cognitive skills to develop. This hypothesis is consistent with Ryle's classification (1949) of knowledge into categories of knowing that something "exists" and knowing "how" it operates. Anderson's categorization can be regarded as a more sophisticated version of Ryle's classification. One limitation of the ACT model is the hypothesis that transformation of knowledge is unidirectional and only involves transformations from declarative to procedural knowledge, while it can be argued that transformation is bidirectional. This may be because the ACT model is more concerned with maturation than with the creation of knowledge. Four Modes of Knowledge Conversion. The assumption that knowledge is created through conversion between tacit and explicit knowledge allows us to postulate four different "modes" of knowledge conversion: (1) from tacit knowledge to tacit knowledge, (2) from explicit knowledge to explicit knowledge, (3) from tacit knowledge to explicit knowledge, and (4) from explicit knowledge to tacit knowledge. ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation First, there is a mode of knowledge conversion that enables us to convert tacit knowledge through interaction between individuals. One important point to note here is that an individual can acquire tacit knowledge without language. Apprentices work with their mentors and learn craftsmanship not through language but by observation, imitation, and practice. In a business setting, on-the-job training (OJT) uses the same principle. The key to acquiring tacit knowledge is experience. Without some form of shared experience, it is extremely difficult for people to share each others' thinking processes. The mere transfer of information will often make little sense if it is abstracted from embedded emotions and nuanced contexts that are associated with shared experiences. This process of creating tacit knowledge through shared experience will be called "socialization." The second mode of knowledge conversion involves the use of social processes to combine different bodies of explicit knowledge held by individuals. Individuals exchange and combine knowledge through such exchange mechanisms as meetings and telephone conversations. The reconfiguring of existing information through the sorting, adding, recategorizing, and recontextualizing of explicit knowledge can lead to new knowledge. Modern computer systems provide a graphic example. This process of creating explicit knowledge from explicit knowledge is referred to as "combination." The third and fourth modes of knowledge conversion relate to patterns of conversion involving both tacit and explicit knowledge. These conversion modes capture the idea that tacit and explicit knowledge are complementary and can expand over time through a process of mutual interaction. This interaction involves two different operations. One is the conversion of tacit knowledge into explicit knowledge, which will be called "externalization." The other is the conversion of explicit knowledge into tacit knowledge, which bears some similarity to the traditional notion of "learning" and will be referred to here as "internalization." As will be discussed later, "metaphor" plays an important role in the externalization process, and "action" is deeply related to the internalization process. Figure 1 illustrates the four modes of knowledge conversion. Three of the four types of knowledge conversionsocialization, combination, and internalization, have partial analogs with aspects of organizational theory. For example, socialization is connected with theories of organizational culture, while combination is rooted in information processing and internalization has associations with organizational learning. By contrast, the ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 Figure 1 Modes of the Knowledge Creation Tacit knowledge knowledge Socialization TO Explicit knowledge Externalization From Explicit knowledge Intemnalization Combination concept of externalization is not well developed. The limited analysis that does exist is from the point of view of information creation (see Nonaka 1987). Theories of organizational learning do not address the critical notion of externalization, and have paid little attention to the importance of socialization even though there has been an accumulation of research on "modeling" behavior in learning psychology. Another difficulty relates to the concepts of "double-loop learning" (Argyris and Schon 1978) or "unlearning" (Hedberg 1981), which arises from a strong orientation toward organization development (OD). Since the first integrated theory of organizational learning presented by Argyris and Schon, it has been widely assumed, implicitly or explicitly, that double-loop learning, i.e., the questioning and reconstruction of existing perspectives, interpretation frameworks, or decision premises, can be very difficult for organizations to implement by themselves. In order to overcome this difficulty, they argue that some kind of artificial intervention such as the use of organizational development programs is required. The limitation of this argument is that it assumes implicitly that someone inside or outside an organization knows "objectively" the right time and method for putting double-loop learning into practice. A mechanistic view of the organization lies behind this assumption. Seen from the vantage point of organizational knowledge creation, on the contrary, double-loop learning is not a special, difficult task but a daily activity for the organization. Organizations continuously create new knowledge by reconstructing existing perspectives, frameworks, or premises on a day-to-day basis. In other words, double-loop learning ability is "built into" the knowledge creating model, thereby circumventing the need to make unrealistic assumptions about the existence of a "right" answer. 19 IKUJIRO NONAKA Dynamic Theoryof OrganizationalKnowledge Creation Modal Shift and Spiral of Knowledge. While each of the four modes of knowledge conversion can create new knowledge independently, the central theme of the model of organizational knowledge creation proposed here hinges on a dynamic interaction between the different modes of knowledge conversion. That is to say, knowledge creation centers on the building of both tacit and explicit knowledge and, more importantly, on the interchange between these two aspects of knowledge through internalization and externalization. A failure to build a dialogue between tacit and explicit knowledge can cause problems. For example, both pure combination and socialization have demerits. A lack of commitment and neglect of the personal meaning of knowledge might mean that pure combination becomes a superficial interpretation of existing knowledge, which has little to do with here-and-now reality. It may also fail to crystallize or embody knowledge in a form that is concrete enough to facilitate further knowledge creation in a wider social context. The "sharability" of knowledge created by pure socialization may be limited and, as a result, difficult to apply in fields beyond the specific context in which it was created. Organizational knowledge creation, as distinct from individual knowledge creation, takes place when all four modes of knowledge creation are "organizationally" managed to form a continual cycle. This cycle is shaped by a series of shifts between different modes of knowledge conversion. There are various "triggers" that induce these shifts between different modes of knowledge conversion. First, the socialization mode usually starts with the building of a "team" or "field" of interaction. This field facilitates the sharing of members' experiences and perspectives. Second, the externalization mode is triggered by successive rounds of meaningful "dialogue." In this dialogue, the sophisticated use of "metaphors" can be used to enable team members to articulate their own perspectives, and thereby reveal hidden tacit knowledge that is otherwise hard to communicate. Concepts formed by teams can be combined with existing data and external knowledge in a search of more concrete and sharable specifications. This combination mode is facilitated by such triggers as "coordination" between team members and other sections of the organization and the "documentation" of existing knowledge. Through an iterative process of trial and error, concepts are articulated and developed until they emerge in a concrete form. This ''experimentation" can trigger internalization through a process of "learning by doing." Participants in a "field" of action share explicit knowledge that is gradu- 20 Figure 2 Spiral of Organizational Knowledge Creation Epistemologial dimension Extemwalization *------1-----|q;Combination Explicit knowledge I ' . Ta t knowledge. n eI ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ - .- - - a Socializa ntocn In tetnd Individual the Group pracicalbeneitsfthtknwledecetersnKnowledge Organizaeon level a alization Inter-organizacion Ontological dimension t ally translated, through interaction and a process of trial-and-error, into different aspects of tacit knowledge. While tacit knowledge held by individuals may lie at the heart of the knowledge creating process, realizing the practical benefits of that knowledge centers on its externalization and amplification through dynamic interactions between all four modes of knowledge conversion. Tacit knowledge is thus mobilized through a dynamic "entangling" of the different modes of knowledge conversion in a process which will be referred to as a "spiral" model of knowledge creation, illustrated in Figure 2. The interactions between tacit knowledge and explicit knowledge will tend to become larger in scale and faster in speed as more actors in and around the organization become involved. Thus, organizational knowledge creation can be viewed as an upward spiral process, starting at the individual level moving up to the collective (group) level, and then to the organizational level, sometimes reaching out to the interorganizational level. 2.5. From Metaphor to Model: Methodology of KnowledgeCreation Before concluding this presentation of the basic constructs of the theory, it is helpful to consider some general principles for facilitating the management of knowledge conversion. One effective method of converting tacit knowledge into explicit knowledge is the use of metaphor. As Nisbet (1969, p. 5) noted, "(m)uch of what Michael Polanyi has called 'tacit knowledge' is expressible-in so far as it is expressible at all-in metaphor." "The essence of metaphor is understanding and experiencing one kind of thing in terms of another (Lakoff and Johnson 1980, p. 5)." Even though ORGANIZATION SCIENCE/Vol. 5, No. 1, February 1994 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation the metaphor is not in itself a thinking process, it enables us to experience a new behavior by making inferences from the model of another behavior. The use of metaphor is broader than the traditional, lexical definition of the term (meta = change; phor = move). According to Lakoff and Johnson: "metaphor is pervasive in everyday life, not just in language but in thought and action. Our ordinary conceptual system, in terms of which we both think and act, is fundamentally metaphorical in nature" (Lakoff and Johnson 1980, p. 3). As a method of perception, metaphor depends on imagination and intuitive learning through symbols, rather than on the analysis or synthesis of common attributes shared by associated things. Rosch (1973) suggested that man describes the world, not in the formal attributes of concepts, but in terms of prototypes. For example, the robin could be seen as a better prototype than the turkey for a small bird. Prototypes provide a mechanism for recognizing the maximum level of information with a minimum of energy. Metaphor is not merely the first step in transforming tacit knowledge into explicit knowledge; it constitutes an important method of creating a network of concepts which can help to generate knowledge about the future by using existing knowledge. Metaphor may be defined as being 'two contradicting concepts incorporated in one word.' It is a creative, cognitive process which relates concepts that are far apart in an individual's memory. While perception through prototype is in many cases limited to concrete, mundane concepts, metaphor plays an important role in associating abstract, imaginary concepts. When two concepts are presented in a metaphor, it is possible not only to think of their similarity, but also to make comparisons that discern the degree of imbalance, contradiction or inconsistency involved in their association. The latter process becomes the basis for creating new meaning.4 According to Bateson (1973) metaphors cut across different contexts and thus allow imaginative perceptions to combine with literal levels of cognitive activities. This experience, he further argues, will promote the type of "presupposition-negation" learning that is closely related with the formation of new paradigms. Contradictions incorporated in metaphor may be harmonized through the use of analogies. Analogy reduces ambiguity by highlighting the commonness of two different things. Metaphor and analogy are often confused. The association of meanings by metaphor is mostly driven by intuition, and involves images. On the other hand, the association of meanings through analogy is more structural/functional and is carried out ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 through rational thinking. As such, metaphors provide much room for free association (discontinuity). Analogy allows the functional operation of new concepts or systems to be explored by reference to things that are already understood. In this sense, an analogy-that enables us to know the future through the presentassumes an intermediate role in bridging the gap between image and logic. It follows from the preceding discussion that tacit knowledge may be transformed into explicit knowledge by (1) recognizing contradictions through metaphor, and (2) resolving them through analogy. Explicit knowledge represents a model within which contradictions are resolved and concepts become transferable through consistent and systematic logic. In the business organization, a typical model is the prototype that represents the product concept. The prototype's specification is then explicit knowledge. It has been pointed out that metaphor, analogy, and model are all part of the process of scientific discovery.5 Whether the metaphoranalogy-model sequence is indispensable in all such processes will depend upon the nature of the question under study; yet in creating new concepts, the model is usually generated from a metaphor. 3. The Process of Organizational Knowledge Creation The theoretical constructs and models described in ?2 may now be related to organizational knowledge creation in a corporate organizational setting. This will be approached by assessing the processes that enable individual knowledge to be enlarged, amplified, and justified within an organization. 3.1. The Enlargement of an Individual's Knowledge The prime mover in the process of organizational knowledge creation is the individual. Individuals accumulate tacit knowledge through direct "hands-on" experience. The quality of that tacit knowledge is influenced by two important factors. One factor is the "variety" of an individual's experience. If this experience is limited to routine operations, the amount of tacit knowledge obtained from monotonous and repetitive tasks will tend to decrease over time. Routine tasks mitigate against creative thinking and the formation of new knowledge. However, increasing the variety of experience is not sufficient by itself to raise the quality of tacit knowledge. If the individual finds various experiences to be completely unrelated, there will be little chance that they can be integrated to create a new perspective. What matters is "high quality" expe- 21 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation rience which might, on occasion, involve the complete redefinition of the nature of a "job." A second factor that determines the quality of tacit knowledge is "knowledge of experience." The essence of "knowledge of experience" is an embodiment of knowledge through a deep personal commitment into bodily experience. Varela et al. (1991) have pointed out that the embodied nature of human knowledge has long been neglected in Western epistemological traditions that have followed from Descartes. They define embodiment as: "a reflection in which body and mind have been brought together" (1991, p. 27). Yuasa (1987) describes this "oneness of body-mind" as the free state of minimal distance between movement of the mind and of the body, as for example in the dynamic performance of a master actor on a stage (1987, p. 28). As Merleau-Ponty (1964) pointed out, bodily experience plays a critical role in the process of crystallization. Commitment to bodily experience means an intentional self-involvement in the object and situation which transcends the subject-object distinction, thereby providing access to "pure experience" (Nishida 1960). This notion is prevalent in oriental culture. As Yuasa mentions: One revealing characteristic of the philosophical uniqueness of Eastern thought is presupposed in the philosophical foundation of the Eastern theories. To put it simply, true knowledge cannot be obtained simply by means of theoretical thinking, but only through "bodily recognition or realization" (tainin or taitoku), that is, through the utilization of one's total mind and body. Simply stated, this is to "learn with the body" not the brain. Cultivation is a practice that attempts, so to speak, to achieve true knowledge by means of one's total mind and body (1987, pp. 25-26). A good case in point is "on-the-spot-ism" in Japanese management. In developing the products and identifying the markets, Japanese firms encourage the use of judgement and knowledge formed through interaction with customers-and by personal bodily experience rather than by "objective," scientific conceptualization. Social interaction between individuals, groups and organizations are fundamental to organizational knowledge creation in Japan. Nevertheless, since this approach uses hands-on experience and action, it sometimes falls in the category of "experiencism" which neglects the importance of reflection and logical thinking. It tends to overemphasize action and efficiency at the expense of a search for higher level concepts which have universal application. While the concepts of "high-quality experience" and "knowledge of experience" may be used to raise the 22 quality of tacit knowledge, they have to be counterbalanced by a further approach to knowledge creation that raises the quality of explicit knowledge. Such an approach may be called a "knowledge of rationality," which describes a rational ability to reflect on experience. Knowledge of rationality is an explicit-knowledge-oriented approach that is dominant in Western culture. It centers on the "combination" mode of knowledge conversion, and is effective in creating digital, discrete declarative knowledge. Knowledge of rationality tends to ignore the importance of commitment, and instead centers a reinterpretation of existing explicit knowledge. In order to raise the total quality of an individual's knowledge, the enhancement of tacit knowledge has to be subjected to a continual interplay with the evolution of relevant aspects of explicit knowledge. In this connection, Schon (1983) pointed out the importance of "reflection in action," i.e., reflecting while experiencing. Individual knowledge is enlarged through this interaction between experience and rationality, and crystallized into a unique perspective original to an individual. These original perspectives are based on individual belief and value systems, and will be a source of varied interpretations of shared experience with others in the next stage of conceptualization. 3.2. Sharing Tacit Knowledgeand Conceptualization As we saw in the previous section, the process of organizational knowledge creation is initiated by the enlargement of an individual's knowledge within an organization. The interaction between knowledge of experience and rationality enables individuals to build their own perspectives on the world. Yet these perspectives remain personal unless they are articulated and amplified through social interaction. One way to implement the management of organizational knowledge creation is to create a "field" or "self-organizing team" in which individual members collaborate to create a new concept. In this connection, it is helpful to draw on the concept of an organization's "mental outlook" as articulated in Sandelands and Stablein's (1987) pioneering work on "organizational mind." While making caveats about the dangers of reification and anthropomorphism, these authors use the analogy of "mind" to identify the process by which organizations form ideas. Mind is distinct from the brain in the same way that computer software is distinct from hardware. Against this background, intelligence may be seen as the ability to maintain a working similarity between mind and nature. ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation The development of ideas associated with organizational mind requires some form of physical substrate (i.e. hardware) which Sandelands and Stablein (1987) argue might be derived from "patterns of behavior traced by people and machines" (p. 139). Organizational behaviors can convey ideas and, like the firing of neurons in the brain, may trigger other behaviors and so form a trace of activation. In the brain, whether or not one neuron influences another depends on a complex set of factors having primarily to do with physical proximity, availability of pathways, intensity of the electrochemical signal, and whether or not the target neuron is inhibited by other neurons. Similarly, whether one behavior influences another in social organizations depends on a complex of factors primarily concerned with physical access, lines of communication, power, and competition from other behaviors. At an abstract formal level, at least, the politics of the social organization and the physiology of the brain share much in common (Sandelands and Stablein 1987, p. 140). It is human activity that creates organizational mind as individuals interact and trigger behavior patterns in others. Managing a self-organizing team involves building an appropriate degree of flexibility into the system which can accommodate a diversity of imaginative thinking in the pursuit of new problems and solutions. Constructinga Field: Building a Self-organizing Team. To bring personal knowledge into a social context within which it can be amplified, it is necessary to have a "field" that provides a place in which individual perspectives are articulated, and conflicts are resolved in the formation of higher-level concepts. Berger and Luchman (1966) say that reality in everyday life is socially constructed. Individual behavior ought to be relativized through an interactive process to construct "social reality." In the business organization, the field for interaction is often provided in the form of an autonomous, selforganizing "team" made of several members coming from a variety of functional departments. It is a critical matter for an organization to decide when and how to establish such a "field" of interaction in which individuals can meet and interact. It defines "true" members of knowledge creation and thus clarifies the domain in which perspectives are interacted. The team needs to be established with regard to the principles of self-organization. In Lewin's (1951) development of the field theory in social psychology, a group is defined as "a dynamic whole based on interdepen- ORGANIZATION SCIENCE/Vo1. 5, No. 1, February 1994 dence rather on similarity." Some indication of the number of members and the composition of their background can be achieved using the principle of "requisite variety" (Ashby 1956). According to our observation of successful project teams in Japanese firms, the appropriate team size may be in the region between 10 and 30 individuals, with an upper limit arising because direct interaction between all the group members tends to decrease as group size increases. Within the team, there.are usually 4 to 5 "core" members who have career histories that include multiple job functions. These core members form focal points in the team and could be seen as the organizational equivalent of the central element in a series of nested Russian dolls.6 That is to say there is a radial pattern of interaction with other members, with closer links being associated with key individuals. Core members play a critical role in assuring appropriate "redundancy" of information within the cross-functional team. Other attributes of members such as formal position, age, gender, etc. might be determined with regard to Morgan's (1986) four principles of "learning to learn, requisite variety, minimum critical specification, and redundancy of functions." The span of team activities need not confined to the narrow boundary of the organization. Rather, it is a process that frequently makes extensive use of knowledge in environment, especially that of customers and suppliers. As Norman (1988) argues, the mental outlook of an organization is shaped by a complex pattern of factors within and outside the organization.7 In some Japanese firms, for example, suppliers of parts and components are sometimes involved in the early stages of the product development. The relationship between manufacturers and suppliers is less hierarchial and arms length than in Western countries. Some other Japanese companies involve customers in the field of new product planning. In both cases, sharing tacit knowledge with suppliers or customers through coexperience and creative dialogue play a critical role in creating relevant knowledge. The significance of links between individuals that span boundaries, both within and outside the organization, has been highlighted by Brown and Duguid's (1991) revealing insight into the operation of "evolving communities of practice." These communities reflect the way in which people actually work as opposed to the formal job descriptions or task-related procedures that are specified by the organization. Attempts to solve practical problems often generate links between individuals who can provide useful information. The exchange and development of information within these 23 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation evolving communities facilitate knowledge creation by linking the routine dimensions of day-to-day work to active learning and innovation. Collaboration to exchange ideas through shared narratives and "war stories" can provide an important platform on which to construct shared understanding out of conflicting and confused data. By contrast with conceptions of groups as bounded entities within an organization, evolving communities of practice are "more fluid and interpenetrative than bounded, often crossing the restrictive boundaries of the organization to incorporate people from outside" (Brown and Duguid 1991, p. 49). Moreover, these communities can provide important contributions to visions for future development. Thus these communities represent a key dimension to socialization and its input to the overall knowledge creation process. The self-organizing team triggers organizational knowledge creation through two processes. First, it facilitates the building of mutual trust among members, and accelerates creation of an implicit perspective shared by members as tacit knowledge. The key factor for this process is sharing experience among members. Second, the shared implicit perspective is conceptualized through continuous dialogue among members. This creative dialogue is realized only when redundancy of information exists within the team. The two processes appear simultaneously or alternatively in the actual process of knowledge creation within a team. Before discussing these two processes further, it is necessary to mention another dimension of the knowledge creating process that can be associated with the self-organizing team. Scheflen (1982) proposed an idea of "interaction rhythms," in which social interactions were viewed as being both simultaneous and sequential. The management of interaction rhythms among team members, i.e., that of divergence and convergence of various interaction rhythms, plays a critical role in accelerating the knowledge creation process. Within the team, rhythms of different speed are first generated and amplified up to certain point of time and level, and then are given momentum for convergence towards a concept. Therefore, the crucial role of the team leader concerns how to balance the rhythm of divergence and convergence in the process of dialogues and shared experience. In sum, the cross-functional team in which experience sharing and continuous dialogue are facilitated by the management of interaction rhythms serves as the basic building block for structuring the organization knowledge creation process. The team is different from a mere group in that it induces self-organizing process 24 of the entire organization through which the knowledge at the group level is elevated to the organizational level. Sharing Experience. In order for the self-organizing team to start the process of concept creation, it first needs to build mutual trust among members. As we shall see later, concept creation involves a difficult process of externalization, i.e., converting tacit knowledge (which by nature is hard to articulate) into an explicit concept. This challenging task involves repeated, time-consuming dialogue among members. Mutual trust is an indispensable base for facilitating this type of constructive "collaboration" (Schrage 1990). A key way to build mutual trust is to share one's original experience-the fundamental source of tacit knowledge. Direct understanding of other individuals relies on shared experience that enables team members to "indwell" into others and to grasp their world from "inside." Shared experience also facilitates the creation of 'common perspectives" which can be shared by team members as a part of their respective bodies of tacit knowledge. The dominant mode of knowledge conversion involved here is socialization. Various forms of tacit knowledge that are brought into the field by individual members are converted through coexperience among them to form a common base for understanding. As was mentioned earlier, tacit knowledge is a distinctly personal concept. Varela et al. (1991) point out the limitation of the cognitivist view of human experience in comparison with the non-Western philosophical view, and suggest that cognitive experience is "embodied action" rather than a mere representation of a world that exists independent of our cognitive system. The mutual conversion of such embodied, tacit knowledge is accelerated by synchronizing both body and mind in the face of the same experience. Coexperience with others enables us to transcend the ordinary "IThou" distinction, and opens up the world of common understanding, which Scheflen (1982) called "Field Epistemology." Condon (1976) shared this view that communication is a simultaneous and contextual phenomenon in which people feel a change occurring, share the same sense of change, and are moved to take action. In other words, communication is like a wave that passes through people's bodies and culminates when everyone synchronizes himself with the wave. Thus, the sharing of mental and physical rhythm among participants of a field may serve as the driving force of socialization. ORGANIZATION SCIENCE/VO1. 5, No. 1, February 1994 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation Conceptualization. Once mutual trust and a common implicit perspective have been formed through shared experience, the team needs to articulate the perspective through continuous dialogues. The dominant mode of knowledge conversion here is externalization. Theories of organizational learning have not given much attention to this process. Tacit "fieldspecific" perspectives are converted into explicit concepts that can be shared beyond the boundary of the team. Dialogue directly facilitates this process by activating externalization at individual levels. Dialogue, in the form of face-to-face communication between persons, is a process in which one builds concepts in cooperation with others. It also provides the opportunity for one's hypothesis or assumption to be tested. As Markova and Foppa (1990) argue, social intercourse is one of the most powerful media for verifying one's own ideas. As such, dialogue has a congenetic quality, and thus the participants in the dialogue can engage in the mutual codevelopment of ideas. As Graumann (1990) points out, dialogue involves "perspective-setting, perspective-taking, and multiperspectivity of cognition." According to the theory of language action suggested by Austin (1962) and Searle (1969), illocutionary speech does not only involve a description of things and facts but the taking of action itself. The expression "language is behavior," therefore, implies that language is a socially creative activity and accordingly reveals the importance of the connection between language and reality created through dialogue. For these purposes, dialectic is a good way of raising the quality of dialogue. Dialectic allows scope for the articulation and development of personal theories and beliefs. Through the use of contradiction and paradox, dialectic can serve to stimulate creative thinking in the organization. If the creative function of dialectic is to be exploited to the full, it is helpful to pay regard to certain preconditions or "field rules." First, the dialogue should not be single-faceted and deterministic but temporary and multifaceted so that there is always room for revision or negation. Second, the participants in the dialogue should be able to express their own ideas freely and candidly. Third, negation for the sake of negation should be discouraged. Constructive criticism substantiated by reasoned arguments should be used to build a consensus. Fourth, there should be temporal continuity. Dialectic thinking is a repetitive, spiral process in which affirmation and negation are synthesized to form knowledge. Strict and noncontinuous separation of affirmation and negation will only result in logical contradictions and thus hamper the ORGANIZATIONSCIENCE/VO1. 5, No. 1, February 1994 creation of knowledge. Team leaders, therefore, should not discourage the dramatic and volatile dimensions of dialogue. If these conditions are met, dialogue will add much to the potential of the group in knowledge creation. The process of creating a new perspective through interpersonal interaction is assisted by the existence of a degree of redundant information. Making and solving new problems are made possible when its members share information by obtaining extra, redundant information which enables them to enter another person's area and give advice. Instances of "learning by intrusion" (Nonaka 1990) are particularly widespread in Japanese firms.8 In the meantime, redundancy of information also functions to determine the degree to which created perspectives are diffused. It may sound paradoxical; yet the degree of information redundancy will limit the degree of diffusion. In this sense, information redundancy can serve to regulate the creation of perspectives. It is now possible to turn to the question of how to conceptualize new perspectives created from shared tacit knowledge. According to Bateson (1979), concepts are created through deduction, induction, and abduction. Abduction has a particular importance in the conceptualization process. While deduction and induction are vertically-oriented reasoning processes, abduction is a lateral extension of the reasoning process which centers on the use of metaphors. Deduction and induction are generally used when a thought or image involves the revision of a preexisting concept or the assigning of a new meaning to a concept. When there is no adequate expression of an image it is necessary to use abductive methods to create completely new concepts. While analytical methods can be used to generate new concepts via inductive or deductive reasoning, they may not be sufficient to create more meaningful -or radical-concepts. At the early stages of information creation, it is very useful to pursue creative dialogues and to share images through the metaphorical process by merging perspectives, i.e., tacit knowledge. 3.3. Crystallization The knowledge created in an interactive field by members of a self-organizing team has to be crystallized into some concrete "form" such as a product or a system. The central mode of knowledge conversion at this stage is internalization. Crystallization may then be seen as the process through which various departments within the organization test the reality and applicability of the concept created by the self-organizing team. These internalization processes are facilitated by en- 25 IKUJIRO NONAKA Dynamic Theoryof Organizational Knowledge Creation couraging experimentation. It should be noted that because the instrumental skill, a part of tacit knowledge, is exploited in this process, a new process of knowledge creation is triggered by crystallization. While this usually leads to refinement of the concept, sometimes the concept itself is abandoned and fundamentally recreated. The process of crystallization is a social process which occurs at a collective level. It is realized through what Haken (1978) called "dynamic cooperative relations" or "synergetics" among various functions and organizational departments. This relationship tends to be achieved most effectively when redundancy of information creates scope for critical knowledge conversion processes to take place. In an organization where there is redundancy of information, the initiative for action can be taken by the experts who have more information and knowledge. This characteristic is what McCulloch (1965) called "the principle of redundancy of potential command." In this principle, all parts of a system carry the same degree of importance, and each part's impact upon the system is determined by the importance of information it contains in each specified context. In sum, each part has the potential of becoming the leader of the entire system when there exists redundancy of information. The speed at which Japanese firms develop new products s...
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