Tacit Knowledge-based Network & Creation of New Value-No.2

Small Network of “Tacit Knowledge”

In the establishment of tacit knowledge network, the author found out, through his extensive global experience, some essential factors to make the strong tacit network, by establishing solid human relationship – sustaining and long-lasting – regardless of the difference of nationality or culture.

(1) close friendship based on mutual in-depth human-trust
(2) friend of a very close friend
(3) mutual interest and respect, especially in the future perspective

All three of the above can be summarized as “mutual human trust”.
In establishing the GVIN scheme, the human network became the most important and crucial issue, because its business is to find the best Seeds Holders, the best Needs Holders and the best partnership for global innovation. This truly requires enormous comprehensive human network on both global ventures and corporate companies.
Since this extensive global human network contains “mutual human trust”, the network is a sort of the chain of “tacit knowledge”. Except those who belong to GVIN Ltd, there is no written contract, no visible collaborative chart, no documents to share, no common data base with excellent people in the tacit knowledge chain. But, still, people in the tacit knowledge network are extremely valuable and powerful potential partners.

Tacit Knowledge Network Type

Through the actual experience in establishing, expanding and sustaining human networks, the author propose the following tacit knowledge network types.
(1) Type I : Core Network
This is the human network formed with the direct meeting without any indirect introduction or reference, and involves no business relationship. For example, friends from childhood days, primary school classmates, friends in the same sporting club in high school and/or university belong to this category. The friendship formed in this category is extremely firm and everlasting. Size of the network is relatively fixed, depending upon the individual’s experience. This type of human network is named “Core Network”. There are actually various examples where a company president called for his primary school classmate to help him in order to overcome an unprecedented difficult business situation. He can trust his boyhood classmate 100 percent.
(2) Type II: Genuine Network
This category of network includes friendship formed not in the business environment, therefore it basically involves no economical or financial interest. Friendships formed through hobby, like tennis, golf, hiking, painting, pottery, etc are categorized in this type. The connection is very strong, because they mutually trust and respect the other person. Author experienced much human relationship in this category. The size of this network can expand without any limitation. In many companies, this type of human network strengthens the management, both inside and outside. In the future, partnership will become crucial value to the company, where this type of network will perform important role. In the actual experience of the author, human relationship established in this type of network, truly worked in various projects in the company as well as in cross-cultural global projects, as described in this paper.
(3)Type III: Core Business Network
Included in this type are those friends formed through the work in the same group, departments, projects, or programs. The connection in this category is relatively strong and reliable, because the friendship is formed at the first or early stage of business. In this category, however, the network strength can get stronger or weaker, depending upon the level of success, the strength of business relationship, as well as the amount and degree of benefits or advantages. The size varies a lot, but cannot expand much. Actually through the team-work to challenge some difficult tasks or projects, many times close friendship and mutual trust, regardless of the difference in companies or cultures, will come out. This will last long and can become very strong basis for future partnership. One such example is a national project, where various people representing different company, will join and work together. The author experienced many company projects, several national projects and international consortium and actually obtained close friendship through these projects.
(4) Type IV : Combined Business Network
This is the network formed through the references, recommendation, or introduction of the already established network or friend. This is the network that can be expanded and strengthened without limitation. The scale or strength totally depends upon the efforts, energy, and many factors of individuals as well as those who help them to do so. The network formed through FMT connection as the author describes in this paper can be categorized to this type. Actually this type of network is the most frequently observed and used in business everywhere. This network will grow by itself, if the basis of human relationship is healthy and trustworthy. Therefore, some network will grow and grow in acceleration, once it gets trust and credit from partners. Of course, however, once such trust is lost, the network will crumble and shrink speedily. The author experienced this type of network growing in the global arena, especially in his involvement in various global collaborations, as he described in the paper.

Fig. 5 Transition among 4 Types of Human Network

Fig. 5 Transition among 4 Types of Human Network

There are various possible type-to-type transitions among the above four types (Fig. 5). The most basic and probable transitions are I to IV, II to III, II to IV, III to II, and III to IV. It is also possible that III will influence to expand to get more friends. Also, IV will expand by the influence of IV. That is III to III and IV to IV are possible transitions. Also, interactions will happen among all types, but particularly between III and IV. So, all types of network can transit to type IV. In this sense, maintaining the type IV network which can grow without limitation is very important and effective. Thus, the growth model of “small network of tacit knowledge” can be described as the transition of network types.

Acceleration of Innovation

Global innovation is achieved by the effective global cooperation of new technology Seeds Holders and innovation Needs Holders – usually large corporate companies. Especially, this best team-up must be done speedily and firmly. As the author writes in the patent which was filed to the Japanese Patent Office 5 years ago, the GVIN’s unique three stage structure answers to these questions and requests. In order for the author to achieve this, it is necessary for him to team-up with both the Seeds Holders and Needs Holders.
Team-up with seeds holders, mainly “global high-tech ventures”, is done by firstly expose each other so that they trust mutually. This is often possible by identifying the other party through the human network of close friends, or through the reference by the established trustworthy organization. On the other hand, team-up with needs holders, mainly “global corporate companies”, is done based upon the trust base established through the long-time sustaining friendly relationship. This is especially so in Japanese industries.
In pursuing these processes, it is effective to identify various key persons as very close persons inside of GVIN through FMT network, because Japanese corporate companies have tough windows to outsiders but not so to people virtually inside. Throughout the author’s experience, especially in GVIN business, he is confident that human network, i.e. small network of “tacit knowledge”, is the key. It is important, however, that the benefit must be on both parties – actors of using the network and those who are used – especially when the business will give profits to the actors.

Through the actual business experience in GVIN, the author identified and logically explained the important issues, as summarized below, in the relationship between small network of tacit knowledge and the acceleration of global innovation.
(1) Small network of knowledge, especially “tacit knowledge” helps to accelerate global innovation.
(2) Small network of tacit knowledge (SNTK) is formed and established by the accumulation of many folds of efforts in trust-based friendship.
(3) Across the boundary of different culture and nationality, trust-based human network gives the solid base of team-up between the seeds holders and the third party – in-between to realize the best seed-need partnership, as well as that between needs holders and the third party.
(4) Through the experience of the author, human network in versatile social activities is very helpful to enhance trust, because this will give the enhancement of exposure of more genuine mutual human nature.
(5) Through GVIN (Global Ventures Industries Network) scheme, global innovation can be accelerated, especially by the help of “small network of tacit knowledge”, both at seeds and needs sides.
(6) Small network of tacit knowledge must be active and must grow. In order to sustain such SNTK, it is necessary to apply and use such network, which will generate and give hints to the more growth expansion of the network.
(7) Small network of tacit knowledge is effective and beneficial. But, it must be in two ways. That is, effectiveness and benefit must be shared between the actors and non-actors.
(8) Four types of small networks of tacit knowledge were proposed and analyzed. Also, transitions among them were proposed and analyzed.
(9) Type I and II SNTK are extremely powerful when they are applied to the right situation at the right timing in business environment. So, it is very effective to strategically pursue the enhancement of these types, especially Type II network, because Type I network is so restricted and small.
(10)A new spiral model was proposed to explain the unique synergetic innovation process in the network.

(1) Yutaka Kuwahara, “Role of Governance in the Creation of Knowledge”, Knowledge Management Forum, Helsinki, August 2004
(2) Yutaka Kuwahara, “A New Scheme of Network for Innovation (GVIN) Connecting Global Ventures and Japanese Industries”, 2nd IEF, September 2002, Beijing
(3) Yutaka Kuwahara, “What is Management of Technology (MOT)”, published by Maruzen Book Publishing Company, Feb. 2004
(4) Ikujiro Nonaka, et al “Essentials of Innovation”, 1994
(5) Peter Drucker, “Managing in a Time of Great Change”, Butterworth Heineman, 1995
(6) Ikujiro Nonaka, Hirotaka Takeuchi, Katsuhiro Umemoto, “Knowledge Creating Company”, Toyo-Keizai, 1996
(7) Ikujiro Nonaka, “Essentials of Innovation”, , 2004
(8) Clayton M. Christensen, “Innovator’s Dilemma”, Harvard Business School Press, 1997
(9) Thomas H Davenport, Lawrence Pullsack, “Working Knowledge”, Productivity Center、2.001
(10) Yutaka Kuwahara, “MOT Perspective for the 21st Century” in a book “MOT-Historical Proof” Maruzen, 2007
(11) Yutaka Kuwahara, “21st Century Perspective and MOT”, to be published, Maruzen, 2009

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