This paper explores what kinds of management actions are needed by businesses to enhance their innovation capabilities. The first step is to clarify the differences between information and knowledge. To do this, the author introduces a model that can explain an individual’s mental processes in knowledge acquisition and creation. With this model, it becomes explainable in a comprehensive way how “explicit” knowledge received as information is turned into individual knowledge; how “tacit” knowledge can be successfully transferred between workers; and how new knowledge can be created by individuals. The model assumes that knowledge workers can be classified into two categories, i.e., Type-1 and Type-2. A Type-1 knowledge worker is one whose knowledge acquisition depends almost exclusively on learning. A Type-2 worker is one who has a substantial amount of self-created knowledge in addition to learned knowledge. It is quite common to find Type-1 workers, but there are not that many Type-2 workers. Successful business firms are usually led by Type-2 workers, who are more innovative. In order to enhance the innovation capabilities of business firms, rather than waiting for the fortuitous advent of Type-2 workers, management should make an effort to transform existing Type-1 workers into Type-2 workers. The author makes the assertion that such a transformation is possible by putting Type-1 knowledge workers into situations where their “insight for knowledge creation” is constantly stimulated. Constant stimulation is made possible by using an IT system based on the Timed-PDCA concept that was proposed by the author in his previous papers. When this system is deployed seriously by management, it becomes possible to facilitate workers’ breakthrough efforts and to promote close collaboration among workers through information sharing and visualization. 
The creation and management of organizational knowledge