Running head: Continuous Knowledge Development in Organizations and Taoist Wisdom 1

Continuous Knowledge Development in Organizations and Taoist Wisdom

Miomir Arandelovic

(a.k.a. Imios Archangelis)

December, 28th, 2016

Adapted from author’s unpublished dissertation paper in DBA IT Curriculum

at California Intercontinental University, CA, United States.

 Abstract

Fast technological development and worldwide operation integration had imposed a strong pres-

sure on modern companies to stay competitive, and continue producing positive business results

in the fast changing market. To achieve these goals, companies needed to adopt the continuous

improvement of its operations. However, due to difficulties to continually grow internal know-

ledge, the organizations often rely on renting the expertise through outsourcing or purchase of

the external services. While such policies could bring temporary success, it has also been proven

that they could weaken the organizational identity and the position in the field. A number of

scholarly works have been dedicated to an achievement of the sustainable knowledge growth,

however, an universally accepted integrative view of the problem has not been established.

Based on the inspiration from an ancient Taoist wisdom, the present study thus will attempt a

coordination of multiple prior findings and best practices, in a holistic framework for the conti-

nuous knowledge development in organizations that is both mathematically rigorous and intui-

tive. The proposed model postulates knowledge generation as one of the core elements of a self-

organizing system that contributes to more sustainable operations within an organization as well

as to its sustainable success in the field.

 Epigraph

The circulation of the Light is the inclusive term. The further the work Secret of the

Golden Flower advances, the more can the Golden Flower bloom. But there is a still

more marvelous kind of circulation. Till now we have worked from the outside on what

is within; now we tarry in the center and rule what is external (Lü, Wilhelm & Jung,

2010).
Continuous Knowledge Development in Organizations and Taoist Wisdom 4

Continuous Knowledge Development in Organizations and Taoist Wisdom

Fast technological development and worldwide operation integrations have imposed

strong pressure on modern companies to keep track of new technology and market changes. To

be able to continue producing positive business results and stay competitive in the fast-changing

environment, companies must strive to address the need for continuous improvement of their op-

erations. According to extensive analysis during recent decades, sustainable improvements in

firm performance require continuous knowledge development, rather than relying on the fixed

operational capabilities (Porter, 1979; Senge, 1990; Nonaka, 1994).

Many organizations have invested in organizational learning as a part of their business

strategy. However, in spite of extensive efforts, firms often fail to sustainably manage necessary

knowledge development, and more than 50% of knowledge management initiatives had been

unsuccessful (Swink, Narasimhan, & Kim, 2005). Thus the present study builds upon the

theoretical findings from prior work in heterogeneous domains and best practices in the field, to

construct a holistic conceptual framework for continuous knowledge development in

organizations.

The goals of the current study’s theoretical framework will be to embody the crucial

aspects of the previous theories in the field while addressing apparent conflicts and bridging the

gaps in the body of knowledge. In particular, the target framework aspires to offer:

1. Mathematical model of the continuous knowledge development in organizations, to

minimize the set of implicit assumptions, which were often made in previous theories,

due to their prevailing social and business nature. The usage of mathematical terms in

expressing some core constructs should be able to offer a unifying and bias-free

description of various aspects of the knowledge development.

Continuous Knowledge Development in Organizations and Taoist Wisdom 5

2. Visual representation of the aforementioned mathematical model that is more suitable

for intuitive reasoning and wide audience. The visual representation of the proposed

knowledge development framework was inspired by the metaphor of the field of bloom-

ing golden flowers embodying the development (Lü, Wilhelm & Jung, 2010), as quoted

in Epigraph.

3. Association of organizational identity and knowledge development, to address the is-

sue of the separation of the knowledge and identity of the organization, which had been

discussed, in regards to personal knowledge, since Plato’s Dialogs (Plato & Jowett,

1892). In addition to the philosophical concerns, it has also been proven in the field that

attribution of the knowledge management (KM) practices to the separate entities, unre-

lated to an organization, can lead to structural conflicts and inefficiencies (Senge, 1990).

The Background of the Problem

The importance of continuous knowledge development, as a driver of an improved

operational performance and competitive advantage, has been widely accepted in the industry

since the nineties. Various views of the problem developed, however, the majority of theoretical

findings, as well as the field-based evidence, clearly demonstrate that business performance can

be enhanced by an ongoing development of the organizational knowledge (Anand et al., 2010).

Even though a number of scholarly works have contributed to the subject of continuous learning

in the organizations, there has been no clear consensus on naming conventions, a set of goals or

the common methodology (Arandelovic, 2015). Various fundamental studies have generally

been focused on separate, even though closely related topics, such as organizational change by

Lewin (1958), competitive strengths by Porter (1979), organizational learning by Senge (1990),
Continuous Knowledge Development in Organizations and Taoist Wisdom 6

knowledge management by Leonard-Barton (1992), and continuous knowledge creation by

Nonaka (1994).

Some of the aforementioned seminal findings have often been considered together as

Knowledge Based Theories (KBT) and utilized in the Value-Rarity-Imitability-Organization

(VRIO) framework. Both KBT and VRIO consider that valuable and unique knowledge is a

most important resource of an organization. Leonard-Barton (1992) accordingly defines

organizational knowledge as a set of factors that makes possible for an organization to act

differently from competitors and thus promote competitive advantage. No rigorous, standardized

definition had emerged, but most of the perspectives converged to a general agreement that

organizational knowledge cannot be reduced to a summary knowledge of the individuals.

Accordingly, the organizational capability has been seen as a direct outcome of the level of

knowledge coordination within a firm (Grant, 1996).

A number of modern organizations, such as Internet giant Google, have based their

essential business strategy on the continual knowledge creation suggested by Nonaka (1994) and

other KBT and VRIO findings (Steiber & Alange, 2013). Investment into continuous knowledge

development paid off for Google and many other firms. However an investigation of the overall

statistical data, performed by Swink, Narasimhan, and Kim (2005), shows that the KBT

initiatives had been failing in about 50% of cases. Swink, Narasimhan, and Kim (2005) suggest

that the most frequent reasons for such failure are:

• Lack of a consistent definition and understanding of knowledge development,

• Difficulties in measuring organizational knowledge improvements,

• Difficulties in internally developing expertise needed to match market requirements,

• Inadequate management support, and

Continuous Knowledge Development in Organizations and Taoist Wisdom 7

• Lack of expertise in performing KBT initiatives.

Confronted with the difficulties to internally ensure the sustainable knowledge

development and performance improvements, organizational executives have also been pursuing

alternative approaches to stay competitive, such as outsourcing, knowledge transfer, and

mergers. While these approaches, driven by cost reduction or resource gap factors, often

provided direct financial benefits, in the long term they often proved to weaken the core

competencies and competitive strengths of an organization (Singh & Zack, 2006).

Arandelovic (2015) identifies multiple conflicting requirements in management of the

knowledge development in modern organizations:

Keep track of the shared standards while preserving internal trade secrets. This

apparent conflict between an organization and its environment requires that IP (Intellectual

Property) of the firms need to be preserved and, on the other hand, shared with partners, vendors

and clients. Organizations are also compelled to continually adopt and integrate standard field

technologies into internally established standard processes.

Balance the goals of current profitability and long-term sustainable development.

According to Singh and Zack (2006), the identification of the domains of knowledge and skill,

which are worth to be developed internally versus pursued externally, have to be carefully

considered. The most important factors to be taken into account in a designation of inner and

outer areas of expertise are organizational readiness for new technologies, the importance of

these technologies to the core business, as well as the proximity of the alternative knowledge

centers.

Balance the need for specialization in specific aspects of knowledge aspects versus

generic skills and flexibility. According to the findings of Leonard-Barton (1992), the core
Continuous Knowledge Development in Organizations and Taoist Wisdom 8

competencies of a firm often become rigidities in its business practice, that are difficult to correct

when the market changes. To address that issue, firm specialization lines would periodically

need to be re-evaluated and potentially modified, to adapt to the current best practices in the

field, while preserving the core functionality.

Implement both structured and free-form methods of knowledge development.

According to Anand et al. (2010), significant operational improvements can be achieved by

measuring the quality of production of an organization, using Six Sigma methods, and

subsequently incorporating the acquired knowledge to optimize internal processes. However, the

research of Jackson and Williamson (2011) produced a seemingly opposite conclusion - that only

free experimentation and brainstorming practices can produce the organizational knowledge

robust enough to cope with unexpected issues in real-world knowledge applications. As both

conclusions were based on evidence from the field, any comprehensive framework of

organizational knowledge development should not exclude either one of these two factors, but

consider them as two independent, valid dimensions of knowledge development.

Balance corporate initiatives and priorities versus individual creativity in work.

Systems thinking regarding firm priorities and values is usually molded by company strategists,

with an intent of imparting the core business directions to each department and individual

(Senge, 1990). However, for this process to work optimally, it is important that opinions of

experts and production results are taken into account in the formation of the core business

strategy, as well as in its periodic re-evaluations.

In addition to the difficulties in synchronization of apparently conflicting goals, the

operational issue in implementing knowledge development initiatives lies in the establishment of

pragmatic processes of continual creation and transfer of knowledge across the organization.
Continuous Knowledge Development in Organizations and Taoist Wisdom 9

The field evidence demonstrated that contextual, intuitive and visual access to shared knowledge

is of high importance for the modern organizations, but it cannot be optimally implemented in an

environment where traditional, hierarchical command chain is the main point of connection

between isolated departments. However, the hierarchical organizational structure had been

historically widely established, to address the need of specialization for specific tasks. While

such structure was convenient for separation of some clearly distinguished manufacturing tasks,

it resulted in the formation of functional silos within many late 20th century firms, which made

continuous knowledge development difficult. Significant studies of the silo problem have been

conducted in recent decades and various integration solutions have been attempted, but without

clear success (Arandelovic, 2016).

Contemporary Perspectives and a Gap in the Literature

While modern scholar opinions converge regarding importance of organizational

knowledge development for modern firms, the focus of field studies are usually specialized and

semantically tied to the specific business areas and practices. Many of issues in implementing

various proposed practices also come from lack of the understanding of an inherently dynamic

nature of knowledge (Swink, Narasimhan & Kim, (2005). Thus, it would be useful identify core

elements of the continual knowledge development and provide some semantic-free definitions.

Definition of Knowledge

Human thinking and knowledge had always been directly related and the theories of

knowledge have often been considered as a core of philosophy and modern science. However, a

definition of knowledge had been a subject of ongoing debate for millennia. The topic has been

approached and analyzed from various complementary perspectives such as abstract and explicit

or individual and group, reflective and active angle of view (Rorty, 1974).
Continuous Knowledge Development in Organizations and Taoist Wisdom 10

Different theories of knowledge had been based on very different initial assumptions and

the application space. For instance, according to (Plato & Jowiett, 1892), a subject has a

Justified True Belief (JBT) on proposition X, or knows about proposition X if:

• X is true.

• Subject believes that X is true.

• Subject is justified in believing that X is true.

While these assumptions could be considered valid in most of the circumstances, they are

not complete, which had been observed even by Plato himself, who points out that they do not

consider self-reflective nature of cognition. A strong premise of ancient Greek philosophy

“Know Thyself” (Gnothi Seauton in Greek) claims that all external knowledge is based on the

Self-Knowledge (Plato, Jowiett, 1892). Detailed analysis by Gettier (1963) also points out that,

due to subjective nature of “belief” and time and space-time restricted nature of “justification”,

JBT premises are not sufficient pre-requisites of knowledge for the purposes of modern science.

In the knowledge definition used in science, additional parameters, such as memory and

systems of reference of the subjects also need to be taken into account in defining the

knowledge. Also, while most of the earlier definitions of knowledge have psychological or

sociological focus, newly discovered facts in modern science, such as DNA-based capabilities of

the species, required a more comprehensive definition of the knowledge. According to Popper

(1974), knowledge should be considered different from both passive set of facts and a subjective

belief, and in the modern science:

• Any dynamic, self-organizing system can have knowledge.

• The system has to have a way to deterministically access its knowledge.

• Knowledge can be exchanged in some way with an external world.

Continuous Knowledge Development in Organizations and Taoist Wisdom 11

Due to difficulties to address the nature of knowledge, most researchers in the modern

social science work resort to only position various knowledge components relatively one to

another. One of the related and frequently used patterns is knowledge pyramid, comprised

according to DIKW (Data-Information-Knowledge-Wisdom) hierarchy. While DIKW period

doesn’t attempt to capture knowledge dynamics, it assigns its objective elements (data and

information) to the bottom of pyramidal structure, while the subjective elements (knowledge and

individuals’ wisdom) are mapped to the tip of the pyramid (Rowley, 2007).

An attempt to ontologically define human knowledge was, however, made by the

physician Pribram (1999), who experimentally established that the knowledge is recorded in

human brain as holonomic transformations. The information structured as wave impressions of

different frequencies are distributed over various regions of the brain and can be later refocused

in the act of remembering. Theory of a renowned quantum physicist, David Bohm (1980)

considers the same, holographic principle to be applicable to all self-organizing systems (sub-

totalities) of the Universe. Bohm’s concept of holomovement is based on a dynamic wholeness-

in-motion, a process where everything is in the state of becoming (universal flux). For Bohm,

the phase space or a domain of available behaviors of any self-organized system is thus never

static either as a whole or in parts, but based on its interconnectivity and continuous exchange of

information with the surroundings.

Organizational Knowledge

The concept of the organizational knowledge in modern social sciences and business had

also been addressed in terms specific to various modalities and instruments of knowledge and its

epistemology, without considerations of its ontology. Davenport and Prusak (2000), for

instance, suggest that knowledge originates and is applied within the minds of individuals but it
Continuous Knowledge Development in Organizations and Taoist Wisdom 12

is reflected, and its multiple sources combined, in the organizations. Consequently, knowledge is

not stored not only in personal memory, but also in documents, information repositories,

organizational routines, processes, practices, and norms of the organization.

Senge (1990) authored one of most popular theories of the organizational knowledge,

which had been widely adopted by executives throughout the world. Senge’s book “Fifth

Discipline, The Art and Practice of The Learning Organization” had been published in many

editions and inspired practical changes in large organizations such as BP, Unilever, Intel, Ford,

HP, Saudi Aramco, Roca, Oxfam, and The World Bank. Senge (1990), envisions modern

organizations as places where individual members continually learn together, expanding their

capacity to create the results they desire and nurturing new and expansive patterns of thinking.

According to Senge (1990), five strategic disciplines should be implemented in companies to

support such process: systems thinking, personal mastery, mental models, shared vision and team

learning.

The findings of Senge have been widely adopted by scholars in the field, but were not

easy to implement in practice and the eventual success had often been determined by the

capability of the leaders, associated to difficult to describe, subjective tip of DIKW pyramid (

Rowley, 2007). Jackson and Williamson (2011) point out that a fully systematized approach to

knowledge management cannot be ever fully applied in practice, as it fails to satisfy the

unanticipated, indeterminate needs that can only be established only with trial an error.

According to these authors, free experimentation and brainstorming practices, even though

without a direct financial justification, could help creation of the knowledge assets that are

inimitable and non-substitutable.

Continuous Knowledge Development in Organizations and Taoist Wisdom 13

Continuous Knowledge Development in Organizations

Nonaka (1994) provided one of the seminal theories of the Continuous Knowledge

Development in Organizations, which integrates many important dimensions of the knowledge

highlighted by modern science and the pragmatic business approach. Nonaka’s theory of

Dynamic Knowledge Creation, presented in Figure 1 below, takes into account internal and

external, carrier and process and implicit and explicit aspects of the knowledge, connecting both

ontological and epistemological dimension of knowledge creation.

Figure 1. Organizational Knowledge Creation Mechanisms, adapted from Nonaka, 1994.

According to Nonaka (1994), similarly to the perspective of Bohm (1980), organizations

are exposed to continuous change and thus the organizational knowledge is always in the state of

becoming, generated from the continuous dialog between its tacit (or implicit) and explicit

aspects. Nonaka (1994) explains that tacit knowledge mostly has “personal quality” and is

comprised of the understanding and skills, which are deeply rooted in the specific context or the

prior experiences of a subject, such as an individual or the organization. On the other side,

explicit or codified knowledge and its “group quality” relates to shareable aspects of the
Continuous Knowledge Development in Organizations and Taoist Wisdom 14

knowledge, suitable for transmission between multiple entities through some standardized

means, such as written language, Unified Modeling Language (UML) diagrams or Architectural

Design Patterns. Nonaka defines continuous knowledge development as a process where tacit

and explicit form of knowledge constantly convert one to another, through so-called Spiral of

Knowledge development of an organization. The modes or phases of the Nonaka’s spiral of

knowledge conversion are:

• Socialization or tacit-to-tacit knowledge conversion.

• Externalization or tacit-to-explicit knowledge conversion.

• Combination or explicit-to-explicit knowledge conversion.

• Internalization or explicit-to-tacit knowledge conversion.

. As the need for sustainable knowledge development had been recognized as a burning

issue in modern world, aforementioned fundamental theories as well as significant follow-up

work, provided a significant contribution to its understanding. However, the practical

application of knowledge creation initiatives was only partially successful, while the differences

between various target-specific practices and the gaps between covered areas made difficult to

establish a comprehensive view of the problem. Thus, the goals of the current study are to

establish some semantic-free definitions and interlink crucial aspects of the previous theories in

the field into a unifying conceptual framework, which aspires to bridge the gaps in the body of

knowledge on the subject and to address aforementioned conflicts of knowledge management

practices.

Holographic Model of the Continuous Knowledge Development

It has been widely recognized today that systematic study of the organizational

knowledge and organizational knowledge development had originated in twentieth century by

Continuous Knowledge Development in Organizations and Taoist Wisdom 15

Lewin and his three-step process of the organizational change (Meyer & Meyer, 2011).

However, the modern theories of knowledge development in business organizations developed

from the ideas regarding individual and group knowledge, which had existed from the dawn of

the civilization.

As early as in fifth century B.C. Greek philosopher Plato argued that group of

knowledgeable persons has an ability to bring about happiness and justice to the Republic (Plato

& Jowett, 1892). Around the same time, Chinese philosopher Lao Zi (老子) postulated the

principle of Virtue, Knowledge or Power (De 德) that can be developed in a group of people at

various levels of the organizational complexity, such as family, tribe, trade line or a school of

thought, and interlink such group with the Universe (Arandelovic, 2014). A few centuries later,

famous Chinese strategist, Zhuge Liang (诸葛亮) acknowledged that that state of affairs in the

region directly depends on the understanding of its geographic potentials and individual

cultivation of the people living and working there, and attempted to regulate country policies

accordingly (Sawyer, 2014).

The theories describing dynamism of knowledge as a dialog between its tacit and explicit

aspects, pointed out by Nonaka (1994) or its enfolding and unfolding, discussed by Bohm (1980)

and Pribram (1999), can be also found in the five phases (Wu Xing 五行 ) of nature defined even

couple of millennia earlier, by Huang Di (黄帝), in “Yellow Emperor's Classic of Internal

Medicine” (Huang Di et al., 1978). While the Taoist Wisdom targeted mostly individual

development (cultivation), the underlying constructs could be directly associated with the

organizational knowledge development and the common mathematical terms. The phases of

knowledge generation proposed by Nonaka (1994), as well as four transitional phases of Huang
Continuous Knowledge Development in Organizations and Taoist Wisdom 16

Di could be, for instance, clearly related to the maxima, minima and infle
inflection
ion points of any

social or business function, presented in Figure 2 below.

Figure 2. Knowledge generation elements detected in heterogeneous organizational activities.

The tacit knowledge socialization of Nonaka would correspond to the water phase

(minima), the externalization to the wood phase (i

(inclining
nclining function gradient), knowledge sharing

and combination to the fire phase (maxima) while the internalization (learning) would match

metal phase (declining gradient). Sample sections

ons of the organizational life could be,

respectively, listed as the culture,

ulture, work coordination, inter
inter-organizational
organizational collaboration and

quality control. The analysis could also drill down to more detail, identifying use cases mapped

to ever finer-grain
grain subdivision of the continuum of the organizational activities
activities.. Regardless of

the complexity of the knowledge generation curve in the organizations, the subject can be

decomposed into elementary periodic curves with four inflection points, as on the left side of

Figure 2 above (Arandelovic, 2010). The recording of such vibratory

ory impression would exactly

match the mechanism of human memory, described by Pribram (1999).

Determination of the knowledge aspects for a particular use case would be,
be consequently,

based in subdividing the continuum of its activities, as in Figure 3 below, based on four
Continuous Knowledge Development in Organizations and Taoist Wisdom 17

transitional phases or knowledge phases defined by Nonaka (1994), similarly as, for instance,

one can use calculus to solve non-linear equations numerically, by utilizing bisection method.

Figure 3. Dynamic knowledge generation phases, mapped to radial/phase coordinates.

Due to the universality of the proposed model, based on the inherent states of the

knowledge maturation, rather than on the social variables, the model can be applied to any level

of aggregations of the four elements, in any domain of the life of an organization. In the

proposed model, knowledge creation phases are associated with an angular frequency or phase

domain of any organizational function. Such approach would also be pertinent to the

holographic nature of the knowledge viewed from the perspectives of the exact sciences, as in

the work of Bohm (1980) and Pribram (1999). Implicit and explicit states of the dynamic

systems proposed by the holographic model of Bohm and Pribram can be directly mapped to the

tacit and explicit knowledge of Nonaka’s system, while the internal transformation of the
Continuous Knowledge Development in Organizations and Taoist Wisdom 18

systems’ information through enfolding and unfolding matches internalization and

externalization of knowledge in the Nonaka’s framework.

The fifth, earth phase of the five traditional elements of Taoist knowledge system,

traditionally attributed to the center, could be mapped to a central axis of the knowledge

development spiral, described by Nonaka (1994), as in Figure 3.3. In the terms of the Secret of

the Golden Flower (Tai Yi Yin Hua Zong Zhi 太乙金華宗旨), One is formed by circulation of

light that crystallizes. The stillness of the crystallized light in a poetic image of Lü Dongbin

(呂洞賓) could be related to the formation of tacit knowledge by Nonaka (1994).

Mapped to the concepts of Lao Zi, in Dao De Jing (道德经), Chapter 1 (Arandelovic,

2014) the four transitional phases can be associated to the level of manifestation (You 有), while

the vertical axis would match the realm of non-manifestation (Wu 無). Explicit knowledge

templates (Mu 母) can be replicated (Wan Wu 萬物) in the field (Tian Xia 天下), while its

implicit origin (Shi 始) establishes the relation between aspired and achieved aspects (Tian Di 天

地). Based on these Taoist concepts, yet another association can be made between knowledge

development and cultivation of the perfection defined in Yu Di Mind Seal Classic (Yu Di Xin

Yin Jing 玉皇心印经), where the practitioner gathers non-manifested essence while working in

the field of manifestation (Cun Wu, Shou You 存无守有), as explained by Olson (2003). The

temporal (You 有) cycles thus could continually unfold and enfold from/to central, non-temporal

(Wu 無) development direction in a process of continuous knowledge development, as depicted

by pattern of inexhaustible bellows (Tuo Yue Hu Xu Er Bu Qu 橐籥乎 虛而不屈) by Lao Zi,

mentioned in Chapter 5 of Dao De Jing.

Continuous Knowledge Development in Organizations and Taoist Wisdom 19

Cyclical four-phase structure of the individual development is present throughout Taoist

literature, for instance as Jing-Qi-Shen-Xu (精-气-神-虛) transmutation of Nei Dan (內丹)

practice described by Luk (1973). Taoist Master Tan Qiao (谭峭) in his Books of

Transformations (Huà Shū 化書) also recapitulates the work of this cycle as follows:

“The actualization of Tao occurs through Void transforming to Spirit, Spirit

transforming to Qi, Qi transforming to Form, from the Form myriad things are born,

each with the unique principle. Reintegration of Tao occurs through Form transforming

to Qi, Qi transforming to Spirit and Spirit transforming to Void. This Void is radiant and

thus myriad beings ascend” (Tan, 930).

While these generic development patterns are reflected throughout the comprehensive

Taoist knowledge system and its longevity (Xian 仙) practices, most of the related patterns could

be also identified in the other spiritual traditions. The continuous development cycles that

originates from and returns to an origination point are, for instance, also depicted in Egyptian

knowledge system, in the pattern of Ouroboros (Hornung, 2002), as well as in the Toltec

teachings, in a concept of the constant overcoming of oneself (Castaneda, 1973).

The four transitional elements thus support the growth of the central element. If we

associate the central axis to the core values of mission statement of the organization, each

transitional plane could be associated to a level of its realization. Algebraically, such

organizational mission statement can be associated to a vector X, while a set of knowledge

generating changes can be associated to a matrix A, defining linear transformations that preserve

the organizational direction, as in the Equation (1) below.

11 … 1 1
A • X = X’, where A is extendible matrix: … … … and X is a vector: … (1)
1 …
Continuous Knowledge Development in Organizations and Taoist Wisdom 20

According to this definition, the transformational matrix A can have the arbitrary number

of dimensions 1..n, as long as the mutual relationshi

relationshipp of the core organizational values, defined

as X, stays invariant in manifestations of X’ of the organization to its functional space. Each of

the dimensions driving the knowledge development could be described by separate equation

comprised of 1..m variable Self-reflecting transformations A • X will enhance the

iable factors. Self

identity of the organization, by defining new combinations of organizational core values against

the factors of the specific matrix dimension.

For instance, the

he collaboration dimensio
dimension of knowledge development could include all

four modes of the information exchange, while the performance dimension factors could

similarly include the measurements of the selected performance indicators. The extension of the

Nonaka’s model, presented in Figure 4 below, thus reaches outside of intellectual knowledge

area, into performance and collaboration domain, as adaptation layers of the organization to the

surrounding environment that embody its internal knowledge patterns.

Figure 4. Knowledge Creation

reation Mechanism extended to Performance and Collaboration
Continuous Knowledge Development in Organizations and Taoist Wisdom 21

The four elements of the Nonaka’s framework are still fully applicable according to the

model in Figure 4, but the information exchange (internalization, externalization and

combination) would be observed instead of one, in three dimensions:

1) tacit and explicit knowledge within the organization

2) tacit knowledge and the results of knowledge application (performance)

3) tacit knowledge and collaboration between multiple organizations

The internal process of knowledge development of an organization is presented on the

left side of the above diagram, while explicit knowledge sharing within different organizations is

pictured on the right. The tacit knowledge of the organization is pictured as intrinsic curvature

that it forms in the business space, while the explicit knowledge is displayed as flattened

standardization of the knowledge, to a form suitable for sharing in the field. The right section of

Figure 4 above could be considered as a top-down view of the left section and illustrates an

explicit knowledge exchange of a sample organization (in the center) with other organizations in

its field. Each of the organizations (presented by a small circle) in the field maintains its private

circle of tacit knowledge (larger circle), but it also participates in the explicit knowledge sharing

in the industry (largest circle) with the external knowledge centers. The collaboration enhances

the explicit, and consequently tacit, knowledge of each participating organization, allowing for

cooperative efforts that cover new areas, as marked by the bolded line that interconnects small

circle representing individual organizations in Figure 4.

Based on the above analysis, an organizational identity can be mapped to a center of the

coordinate system and its continuous knowledge development would be defined as its identity

enhancement symmetry. Each of the knowledge creation pattern (socialization, externalization,

combination and internalization), defined by Nonaka (1994), would consequently present a

Continuous Knowledge Development in Organizations and Taoist Wisdom 22

single symmetry transformation. This identity-enhancement paradigm thus proposes the

continual development of the core values of the organization, at the evolving knowledge planes,

in the model where tangible resources and the financial results can be considered as the explicit

(external-facing) aspects of the totality of the organizational existence.

The adoption of such model of the organizations, as dynamically self-enhancing,

multidimensional systems can explain many business aspects that were usually underappreciated

or loosely associated with the organizational operations. The market dominance of the Japanese

car industry, for instance, was for quite some time considered a mystery. Even though Nonaka

(1994) and Wu (2010) pointed to the role of the Japanese firms’ tacit knowledge and its constant

growth in congruence with the postulated mission statements, the intangible nature of these

constructs made them difficult to be recognized and adopted in the West. However, if we

consider that tacit, implicit knowledge of the workers operates in direct and immediate manner,

while the explicit knowledge needs to get de-serialized and serialized via operations that require

storage record space and access time, the difference in the performance of different knowledge

modes becomes clear.

The theoretic support for the proposed framework of the continuous knowledge

development can be also found in a model of gauge symmetry states, proposed by Tiller (2011),

where stateless systems, conforming to U(1) symmetry, are differentiated from those that are

self-coherent in time, conforming to SU(2) symmetry, as on Figure 5 below. Tiller’s

classification of systems, to ones that preserve or do not preserve certain internal symmetry

invariance (such as core values of an organization) in time, could be also directly mapped to

learning (dynamic) versus stateless (static) models of the organization, discussed by Nonaka

(1994).
Continuous Knowledge Development in Organizations and Taoist Wisdom 23

Figure 5. Stateless/U(1) and Stateful/SU(2) Systems, adapted from Tiller (2011).

Reproduced by permission of the author.

The recorded holonomic knowledge patterns, explained by Pribram (1999) comprise the

self-coherent information space of Tiller (2011) or tacit information of the system of Nonaka

(1993), which has usually been called its phase space in physics (Arandelovic, 2010). The

individual phase space can be assigned to a tacit knowledge or subconscious memory of the

person and is accessible proportionally to a level of one’s integrative development, described as

“Combining all in One’s Mind” (Hun Qi Xin 渾其心) by Lao Zi, in Chapter 49 of Dao De Jin

(Arandelovic, 2014).

In addition to the paradigm-shifting perspective of the knowledge (or wisdom, as its most

central element) as a factor of the continuous self-establishment of an organizational identity, the

proposed framework should also address various aforementioned conflicts in the application of

the knowledge management initiatives.

Continuous Knowledge Development in Organizations and Taoist Wisdom 24

Resolution of the conflict between organizational capabilities and rigidities. An

important conceptual critique of an organizational knowledge development had been pointed out

by Leonard-Barton (1992). According to Leonard-Barton (1992), resource investments

performed to a specific type of the knowledge can tax firm’s resources and weaken the ability of

an organization to the potentially important alternative venues of expertise. The operational

rigidities that often develop due to specialization to a specific area make the organization less

able to adapt to the industry and market changes. This issue can be addressed in the current

framework by implemented a continuous testing of current knowledge system against the best

industry practices, as well as the feedback loop between tacit and explicit knowledge (Nonaka,

1994).

Resolution of the conflict between structured and unstructured knowledge creation.

Different perspectives to the continuous knowledge development in organizations focus on either

structured or unstructured mechanisms. For instance Schroeder et al. (2007) suggest an

implementation of Six Sigma structured evaluation methodology as an important venue to

increase organizational knowledge. On the other hand, Jackson and Williamson (2011) insist that

only free experimentation and brainstorming practices can produce the tacit knowledge strong

enough to cope with unexpected issues in practice. The current framework incorporates both

these facets of the knowledge development, by postulating separate transformations of the

organizational identity enhancement symmetry.

Resolution of the conflict in relying on either internal or external expertise. Firms

currently address the need to utilize the latest technologies using different and often mutually

exclusive approaches, such as internal development, outsourcing and knowledge transfer. This

issue is probably most difficult to address in a deterministic manner, as it is related to unique

Continuous Knowledge Development in Organizations and Taoist Wisdom 25

core values and identities of the organizations. However, the alignment of the organizational

knowledge development with the holographic patterns of knowledge growth (Bohm, 1980;

Pribram, 1999), presented in current framework, can be defined arbitrarily small dialog loops

between external and internal knowledge. In the cases when strategic delineations between

internal and external knowledge are necessary, certain heuristic algorithms could be established,

as recommended by Singh & Zack (2006), based on careful alignment between central core

values of an organization.

Balance between knowledge rarity and its standardization. In a dynamic model,

where the cycles of the interrelation of internal and external knowledge constantly change, this

conflict can be addressed by a phased approach to knowledge externalization. Thus a company

can utilize selected core competences for the financial benefit during a designated exploitation

time, while gradually transferring the related knowledge to the external entity. At the same time,

new unique competences can be developed by a combination of internal knowledge and some

best practices emerging in the industry, preserving the VRIO value of the firm.

Even though the organizational identity enhancement model does not directly consider

tangible benefits, they would be naturally manifest as a result of the consistent knowledge

development. An investment into new technologies is an obvious example of the knowledge

development initiative that will enable better quality of products or services. Corporate

investment in an improvement of employee-company relationship, for instance, would also likely

pay off through an influx of value produced by organization members’, which might dedicate

some free time or externally acquired knowledge to the work (Steiber & Alange, 2013).

Similarly, an investment of efforts to analyze customer preferences could ensure the increased

value of the products and services and eventually the higher customer satisfaction. As a rule,
Continuous Knowledge Development in Organizations and Taoist Wisdom 26

bidirectional, win-win resolution of the seemingly conflicting aspects of the business should

ensure a balance in system dynamics and the sustainable improvements.

Conclusion and Directions for Future Research

The intent of the above analysis and the proposed framework had been to holistically

integrate heterogeneous factors of the organic organizational knowledge growths, as drivers of

an improved financial performance and business results organizations. The continuous

knowledge creation of self-transforming organization would build growing values that can

surface whenever an opportunity occurs, thus augmenting the prosperity of the organization and

its members. On the other side, the more holistic model of business operations that does not rely

solely on immediate financial returns can favorably influence the stability of organizations and

labor market, with a positive ripple effect on the whole society.

However, this paper establishes only a base framework. Further work would be

necessary to quantitatively prove its functionality, highlight various implementation details, and

define pragmatic steps of its implementation. Measurements of operational capabilities that

affect operational performance as the dependent variable should also be performed, or the

evidence should be explicitly referenced from the works of the other researchers. The collected

field data of the selected organizations could be subsequently analyzed to evaluate how these

measured values affect dependent variables and which results could be expected in specific

circumstances.

While direct measurement of organizational knowledge as a whole might not be possible,

as indicated by Nonaka (1994), measurement of the parameters regarding its specific aspects,

suggested by Anand et al. (2010) could be combined with its strategic advocacy founded on

qualitative analysis, referred to by Evans (2002), to offer development progress reports. As

Continuous Knowledge Development in Organizations and Taoist Wisdom 27

knowledge develops through a spiral structure, measurements of the effects of knowledge

creation practices would be possible only at the inflection points where that spiral climbs to a

higher plane. Thus, business effects would often show only at the specific points of knowledge

development, where the expertise becomes explicitly involved in the business processes. That

has been exactly the strategy used in some of the most successful modern firms, such as Google

(Steiber & Alange, 2013). At the moments when previously accumulated knowledge get aligned

to drive a business action, the many hours used to gather and structure the information would

manifest in the visible business results and the increased market value of an organization.
Continuous Knowledge Development in Organizations and Taoist Wisdom 28

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