Merging Knowledge Creation Theory with the Six-Sigma Model for Improving Organizations: The Continuous Loop Model

Article excerpt

Organizational knowledge creation theory developed by Ikujiro Nonaka and colleagues primarily in the context of Japanese companies describes a popular model to maximizing the organizational knowledge base. Six-sigma quality improvement theory provides an accepted methodology developed by western companies to increase quality and firm value contributed through process improvement. This essay proposes a model to merge Nonaka's SECI knowledge creation cycle with six-sigma SIPOC processes to increase the speed and effectiveness of management decision-making, work groups, project teams, and any other value adding activity.

1. Introduction

"Test fast, fail fast, adjust fast" is one well-known quote by Tom Peters, author of In Search of Excellence. While the context of Peters' advice centers on the issue of quality improvement the emphasis on speed is really at the heart of the message. Scott Singer is among many who have observed that the rate of change in business environments is accelerating and that the only certainty is that everything changes, constantly (Singer, 2010). The continuing advancement and refinement of computing technologies, transportation, and communications in ways unimagined just a few years ago continue to accelerate the rate of environmental and competitive changes that drive business in the 21st century (NoId, 2009). Siggelkow and Rivkin (2005) observed that competitive pressures have increased due in large part to the rapid rate of change in technology, deregulation, and globalization resulting in increased turbulence and uncertainty in internal and external environments. Peters, Singer, Siggelkow and Rivkin are among a large and growing body of authors observing a need for speed in organizational adaptation and effective management decision-making.

Paul Lawrence and Jay Lorsch (1967) identified two general types of environmental conditions that shape management techniques and organizational structure; stable or uncertain. In stable environments, classical bureaucratic structures may be effective and successful. Uncertain environments are characterized by high rates of change and unpredictability primarily driven by introduction of new technology or growth. Lawrence and Lorsch suggested that the majority of organizations exist in uncertain environments requiring specialized skills and communication techniques to sense and adapt to rapid changes. With an accelerating rate of change as identified by Singer and many others, developing practical ways to apply the contingency theory of organizations advocated by Lawrence and Lorsch becomes a management and leadership imperative. Ultimately, rapid change and the inherent uncertainty in internal and external environments created by change dictate the organizational structure and management style (Lawrence & Lorsch, 1967). Given that most, if not all, organizations in today 's world exist in uncertain environments characterized by rapid change, a primary task for leaders and managers becomes developing ways to change and adapt quickly to survive and prosper. Over the past two decades, knowledge has become recognized as a key resource for organizational success. Grant (1996) suggested that knowledge is the most significant resource that a firm possesses. If knowledge is the most significant resource then a firm's ability to learn faster than competitors represents a significant competitive advantage. Organizations learn and create new knowledge through the experiences of other organizations and individuals therefore, accelerating the rate of organizational learning and knowledge creation represents a significant competitive advantage as organizations learn and create new knowledge by accumulating and processing experiences of individuals and other organizations (Heinrichs & Lim, 2005). De Guess (1988) went further, suggesting that the only sustainable competitive advantage that a company has is its ability to learn faster than its competitors are. …