Some nice quotes:
In the act of creating, people argue. They have heated dialogue. They get upset! Without real exchange, you can't create knowledge. Knowledge creation is a human activity. (...)
... Nonaka's perspective ... runs counter to conventional corporate practice. Most companies assign knowledge management to their information technology departments, which focus on codifying best practices that can be captured, stored, indexed, and retrieved as efficiently as possible. Nonaka views all this data management as minor, almost incidental aspect of the capability development that enables business success. (...)
Nonaka's concept of a knowledge-creating company resembles the kind of community in which generosity is prevalent, people feel recognized as distinct individuals, and informal, honest communication is commonplace. When designers of knowledge management systems fail to understand this - when they (consciously or not) treat humans as interchangeable parts, receiving and processing data - their expensive, high-tech systems get ignored. (...)
... creating ba, a Japanese term that describes a field or space where people freely and openly share what they know in the service of creating something new. ... ba is never solitary; it exists among two or more people. (...)
Companies can foster ba by designing processes that encourage people to think together. ... an exercise called the "five whys" enables employees to diagnose problems... (...)
Westerners generally esteem explicit or theoretical knowledge, which Aristotle called episteme, over tacit or embodied knowledge, which he called techne. (...)
But organization that favor explicit over tacit knowledge limit their capabilities in several ways. (...)
For Nonaka, phronetic wisdom represents a potential antidote. If techne is "know-how", and episteme is "know-why", phronesis is knowing "what must be done." This requires an understanding of how the organization should exist in the world: its purpose, its reason for being. (...)
As companies grow more skilled at knowledge creation, Nonaka sees them drawing customers, suppliers, competitors, education partners, and communities into these processes.
By the way, if you don't know Strategy + Business go over to their nice site and have a look. All their articles can be downloaded in layout-ed version too, which I find fantastic.