Competitiveness of Japanese Companies and Industries: Implications for Thailand Hirotaka Takeuchi...

Competitiveness of Japanese Competitiveness of Japanese Companies and Industries: Companies and Industries: Implications for ThailandImplications for Thailand

Competitiveness of Japanese Competitiveness of Japanese Companies and Industries: Companies and Industries: Implications for ThailandImplications for Thailand

Hirotaka TakeuchiHitotsubashi University

Graduate School of International Corporate Strategy (ICS)

World Bank Institute SeminarMay 19, 2006

Bangkok, Thailand

©Hirotaka Takeuchi, 2006


A Once - in - 200 - years Change Is Taking Place

Industrial Society

Knowledge Society


The Next Society will be The Next Society will be a knowledge society. a knowledge society.

Peter F. DruckerPeter F. Drucker20022002

4 ©Hirotaka Takeuchi, 2006

Knowledge will be Knowledge will be its key resource…its key resource…


5©Hirotaka Takeuchi, 2006

The Means of Production Set the Two Societies Apart

Industrial Society

Knowledge Society

•Machinery•Robots•Assembly line

“HEAD” and “HAND” of every employee


“Explicit Knowledge” and “Tacit Knowledge”

Explicit Knowledge（ HEAD ）

Tacit Knowledge（ HAND ）

Words Numbers Data Formula Sound Pictures

5 Senses Experience Insight, hunch, intuition Emotions, feelings Ideals, beliefs, values




Top Three Most Frequently Cited Publications

Ranked by Straight Count

Rank Author/s Publication 　 (Year) Score

1. Nonaka & Takeuchi The Knowledge-Creating Company 　　　　　　　　　　　　　

　　　　　　　　　　　　 (1995) 　　　　　　　　　　　　　　　　 122

2. Davenport & Prusak Working Knowledge (1998) 58

3. Stewart Intellectual Capital (1997) 55


Top Three Most Frequently Cited Authors

Ranked by Straight Count

Rank Author/s Current Affiliation Score

1. Nonaka, I. Hitotsubashi Univ. ICS (Japan) 306

2. Davenport, T.H. Babson College (U.S.) 218

3. Takeuchi, H. Hitotsubashi Univ. ICS (Japan) 128

3. Bontis, N. McMaster Univ. (Canada) 128









Breath of “Ah-Un”


The Knowledge Conversion Process (1)

Tacit

Explicit


SECI:The Knowledge Conversion Process

SocializationEmpathizing

ExternalizationArticulating

Ex

plic

it

CombinationConnecting

Explicit

InternalizationEmbodying

Ta

cit

Tacit Tacit

Ex

plic

it

Explicit

Ta

cit

TacitTacitKnowledgeKnowledge

ExplicitExplicitKnowledgeKnowledge

ExplicitExplicitKnowledgeKnowledge



新しい「知」を創造するには…②

(Individual)

(Group)

(Organization)(Community)

The Knowledge Conversion Process (2)


新しい「知」を創造するには…②Japanese Approach to Knowledge (1)

A company is viewed as a living

organism rather than a machine for

information processing



Knowledge is defined as “a

dynamic process of justifying

human belief toward the truth”



Tacit knowledge is emphasized

over explicit knowledge, which

is seen as the tip of the iceberg



Self-organizing teams are recognized

as playing a key role in facilitating a

dynamic and intensive interaction

among team members and providing

a shared context for everyone



Middle managers are seen as

knowledge engineers who resolve

the contradiction between top

management and the front line


Middle-up-down Knowledge-creation Process

Solvingcontradiction

ContradictionCross-leveling of Knowledge

Reality (What is)

(Top)

Mid-range theory

(Middle)

Grand Theory (What ought to be)

(Front-line)



Knowledge is acquired from the

outside and utilized effectively to

amplify the knowledge spiral


Internal BA

Individual contexts are shared at Ba, and the shared contextand individual contexts expand themselves through such interaction

Ba

Individual Individual ContextContext

Knowledge


Shared ContextShared Context





External BA

Customer Government

Supplier

CompetitorFirm

University

LocalCommunities

First Professional Road Racing TeamShimano-Frandria(Belgium)in 1973

Sponsoring of Racing Team

Totally against the existing common sensesNothing but Don’ts

Totally against the existing common sensesNothing but Don’ts

Champion in 2004 Lance Armstrong （ USA) (Winner of 6th consecutive TdF 1999-2004)

Sponsoring of Racing Team


Containing paradoxes

Cultivating contradictions

Embracing dualities

Containing paradoxes

Cultivating contradictions

Embracing dualities

新しい「知」を創造するには…③The Essence of Knowledge Creation Lies in Embracing Opposites

Tyranny of the “OR” and

the genius of the “AND”

Tyranny of the “OR” and

the genius of the “AND”


Knowledge – creating Companies Are Dialectic Companies

Thesis Antithesis

Synthesis

“Dialectics” at U.S. Marines“Dialectics” at U.S. Marines

Source: Freedman, D.H., Corps Business: The 30 Management Principles of the U.S.Marines, Harper Business, 2000

Embracing paradoxDealing with complex environments calls for a nonsimplistic, non-extreme mindset, and the tension between traits can provide the needed subtlety and variation in outlook.

Cultivate opposing traitsA need to risk failure / A need to succeed

Being empowered / Respecting the hierarchy

Having well-defined plans and processes / Needing to improvise

Being disciplined / Being creative

Having a core job / Handling different functions

Carefully analyzing / Acting quickly

Having to compete against other Marines

Having to place their success above your own/



East / West

Practice / Theory

New / Old

Small / Large

Cooperation / Competition

Public / Private

Have’s / Have-not’s 　

“Dialectics” at Hitotsubashi ICS“Dialectics” at Hitotsubashi ICS




Great　Thinkers


Great　Lovers



in One Person“Intellectual Muscle”



Change in the Source of Competitive Advantage of Japanese Firms

Industrial Society

Knowledge Society




New Learning about Competitiveness of Japanese Firms

OperationalOperationalEffectiveness　Effectiveness　OperationalOperationalEffectiveness　Effectiveness　

Strategic　Strategic　PositioningPositioningStrategic　Strategic　PositioningPositioning

Doing things betterbetter

OEOE

Doing differentdifferent things

SPSP



Japanese Companies Established the World Standard on OE

OperationalOperationalEffectivenessEffectivenessOperationalOperationalEffectivenessEffectiveness

Best practicesBenchmarkingZero defectsLean productionOutsourcing

TQMKaizenKanbanSpeed


OE is Necessary to Achieve Superior Sustainable Profitability, but NOT Sufficient

OperationalOperationalEffectivenessEffectivenessOperationalOperationalEffectivenessEffectiveness

Competitive Convergence

Absolute, but not relative improvement

A “must” or a “given”


The Key to Achieving SSP Lies in SP

Doing different things from others

Choosing “what not to do”

Strategic　Strategic　PositioningPositioningStrategic　Strategic　PositioningPositioning

(SSP: Superior Sustainable Profitability)









Role of Government in the Knowledge Economy

Encouraging innovation

and entrepreneurship


10.4%

11.3%

12.1%

12.2%

12.5%

15.1%

16.6%

20.1%

27.1%

43.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Machinery - Industrial & Commercial

Photographic Imaging Equipment & Supplies

Tires & Inner Tubes

Soap, Detergents & Cleaning Preparations

Motorcycles, Bicycles & Related Parts

Surgical, Medical & Dental Instruments

Computers, Computer Peripherals & OfficeEquipment

Toiletry & Cosmetic Products

Drugs-Medicinal Chemicals

Toys, Games & Sporting Athletic Goods

Top 10 manufacturing performers (ROIC)in Japan

ROIC


Top 10 service (excluding Financial Services) performers (ROIC) in Japan

ROIC

83.6%

26.2%

23.7%

22.6%

21.8%

16.7%

15.7%

15.6%

15.2%

15.1%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Management, Consulting, Accounting &Engineering Services

Retail - Miscellaneous including SpecialtyRetail Services

Retail - Eating and Drinking Venues

Business Service - Computer & DataProcessing

Prepackaged Software*

Business Service - Buildings includingSecurity

Retail - Apparel & Accessory Stores

Retail - Food Stores

Transportation Services

Internet Service Providers*

* Denotes industry sets added by author.

Hard-to-imitate Hard-to-imitate innovations are innovations are

based onbased ontacit knowledgetacit knowledge



Hard-to-imitate Innovation Examples

Canon Mini-copier

Matsushita’s bread-making machine

Canon Mini-copier

Matsushita’s bread-making machine

Jeff Immelt (GE):Jeff Immelt (GE):

““Abyss called Abyss called commodity hell”commodity hell”


Crisis is the Crisis is the mother of mother of innovationinnovation



Internal BA

Individual contexts are shared at Ba, and the shared contextand individual contexts expand themselves through such interaction

Ba


Knowledge


Shared ContextShared Context


External BA

Customer Government

Supplier

CompetitorFirm

University

LocalCommunities

Innovations are made, Innovations are made, not born.not born.



Knowledge – creating Companies Are Dialectic Companies

Thesis Antithesis

Synthesis

CompaniesCompaniesdon’t innovate; don’t innovate;

people do.people do.





Tom Friedman:Tom Friedman:

“ “Key to innovation Key to innovation 　　　　 is is talent”talent”


ConnectednessConnectedness

Open SourcingOpen Sourcing

Collaboration/co-creationCollaboration/co-creation


War for TalentWar for TalentWar for TalentWar for Talent

War for CapitalWar for CapitalWar for CapitalWar for Capital

War for IdeasWar for IdeasWar for IdeasWar for Ideas


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