Less than 30 miles from the White House, the space shuttle Discovery silently rests on its laurels in a behemoth cargo hanger, an inanimate but undeniable American hero.
In 30 years of service, beginning with its first-of-its-kind launch in 1984, the embodiment of innovation flew 39 times—more than any other shuttle.
Despite its unnatural retirement on the ground, the spacecraft’s mission soars on. New designs are still born from the most complex thing ever built; civil servants and privateers take heart from one of the most conspicuous examples of a successful public- private partnership.
NASA took 12 years to build the space shuttle, with help from at least five other contractors; contrast that with Henry Ford’s development of the assembly line, which took only seven years and internal resources to change the world.
The shuttle’s design was the epitome of knowledge creation before the term took off. Thousands of employees—and, more important, their ideas—stood behind the development of the iconic vehicle.
We’ve come a long way since the shuttle’s glory days. The processing power required to send a man to space has been eclipsed by a single smartphone.
Now, the procedures to gather, share, and grow knowledge are increasingly viewed as an economic driver rather than a patriotic duty. The words “knowledge management” are a resounding anthem for the business world. Knowledge is the heart of innovation, and a justification for job creation, mergers, acquisitions, and alliances.
As in space exploration, innovation in the transportation sector is crucial, according to Assistant Professor Richard Linowes, who has spent much of his career comparing innovation in multinational firms.
Linowes was interested in discovering how new ideas come to fruition in such industries. How does a pipe dream—like the space shuttle, or the electric car—become a product? He recognized that knowledge management spans all units within a firm; it happens long before a prototype reaches the production floor, where it had most widely been studied.
In 2005, data collection began; in 2010, Linowes set off for Japan, Southeast Asia, the Middle East, and Europe, visiting headquarters and subsidiaries of the big guns: General Motors, Ford, Toyota.
Linowes created a model to frame the research, along with his Kogod colleague, Professor Tomasz Mroczkowski, Hideo Ueki of Tokyo Keizai University, and Mariko Ueki of Kyoto Sangyo University.
The model suggests that a change in the global business environment influences top leadership, which in turn changes management philosophy, vision, and strategy. Those choices trickle down to shape brand value, which reflects customer satisfaction and a product’s fate in the marketplace.
In other words, external trends impact the internal organizational culture, which provides the backdrop for knowledge creation to occur. Human resource systems develop the people who develop the ideas.
The researchers met with 171 executives from 28 major Japanese and US automotive and information appliance firms—competitive, knowledge-intensive global industries. They uncovered a surprising commonality in successful knowledge creation activities.
Supportive HR practices were crucial for successful knowledge creation: things like cross- functional group training, e-learning, and career development programs. Job rotation was also seen as valuable, though the Japanese were far more likely to report using this tool.
“One of the keys to Japanese success is their system of knowledge creation and knowledge management, which has not been well understood in the West,” Mroczkowski said. “Our research explains how their approach to knowledge augmentation works.”
Moon in Their Eyes
The team uncovered a telling difference in attitude about knowledge management between the Japanese and the Americans.
While the Japanese managers displayed a more methodical approach to the practice, Americans were more enthusiastic about the little bit of knowledge management they had.
The Japanese “take in stride the improvements brought on by [knowledge management enhancements],” the authors wrote. “Americans, by contrast, are more ‘romanced’ by them.”
Linowes found that the Japanese were more thorough, more systematic, and displayed less ego involvement. They excelled at the implementation of knowledge management tools; they were more likely to use cross-functional training, e-learning, career development, and job rotation.
The Americans’ romanticism was another common part of the puzzle.
“It may also be that American firms are starved for these improvements, so they’re especially appreciative of the ones they’ve got,” he acknowledged.
But the Japanese were more likely to say their organizations emphasized customer satisfaction, and they were more likely to make informed decisions based on data-proven theories.
For example, a knowledge portal for the automobile industry could be a website where dealers and manufacturer share details about new models of cars. The data showed that Japanese firms were more likely to report using a tool like this, while the Americans were more likely to see positive benefits in using it.
Here’s another telling anecdote. General Motors and Toyota used to jointly operate the NUMMI auto- mobile manufacturing plant in Fremont, California. Toyota needed help selling cars in the US, and GM wanted to learn about lean manufacturing from the Japanese leader. NUMMI built roughly 6,000 vehicles a week from 1984 until it closed in 2010 (the plant has now reopened as a Tesla Motors production facility).
When the GM executives arrived at the plant, they were surprised to see carpet spread throughout the factory floor. They scoffed. “Why do you need carpet in a production factory?” they asked. “What a waste. You really caved into union demands.”
The Toyota executives politely informed them that their research had shown when parts were dropped on an uncarpeted floor, workers would not pick them up. When the floor was carpeted, the behavior changed.
After thorough analysis of the data, the Japanese managers adopted a policy of carpeting their plants to better control inventory levels.
Location, Location, Location
Linowes’s team also found that a firm’s location— regardless of the origins of its ownership—had an impact on the success of its knowledge creation system. Despite the Americans’ professed love for knowledge management, firms located in Japan reported better knowledge creation than firms located in the United States.
This even applied to Japanese firms that happened to be located in the United States.
Linowes wasn’t surprised. He had spent extensive time in Japan, and witnessed firsthand the country’s cohesive culture.
For knowledge creation to be effective, management vision and business strategy must permeate an organization; Japanese respondents were much more likely to report that this was the case.
Culture can even impact the design of a product.
Such was the case when Toyota discovered that its cars in the Middle East would benefit from strategically repositioned air conditioning vents. Instead of having cool air blow on the customer’s knees—which, in that part of the world, are often covered by long robes—Toyota designers moved the vents to position them near the driver’s ankles. Toyota now has 80 percent market share in Oman.
Linowes admits that the tools and attitudes behind knowledge creation are only worth this amount of introspection if they result in return on investment. “What counts is success in the marketplace,” he said. “If you are introducing things customers want, it should pay off.”