Japanese companies have become world leaders in the automotive and electronics industries. How they do that? What is the secret to their success? Two leading Japanese business experts, Ikujiro Nonaka and Hirotaka Takeuchi give us insights at how Japanese companies create new knowledge and use it to produce successful products and technologies in their book The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation.

This book covers two types of knowledge: explicit knowledge and tacit knowledge. The explicit knowledge is the knowledge found in manuals and procedures, while the tacit knowledge is learned only by experience and communicated indirectly through metaphor and analogy. The Japanese companies are focused on tacit knowledge which they have learned how to transform this knowledge into explicit. The Knowledge-Creating Company explains how Japanese companies are converting the tacit knowledge into explicit with case studies drawn from numerous Japanese companies such as Honda, Canon, NEC, Nissan, 3M, Matsushita, and many more.

The authors, Nonaka and Takeuchi, point out that creating knowledge will become the key to sustaining a competitive advantage in the future.