Prof. Ikujiro Nonaka, the grand father of Scrum — he first defined the word "Scrum" with Hirotaka Takeuchi in 1986, as a knowledge creating process in his paper “The New New Product Development Game” — has recently been presenting a new type of leadership found in Japanese management such as Honda, with help from the philosopher Aristotle’s words.

I have been practicing Agile/Lean software development in Japan, and found that every Agile/Lean self-organizing team needs each member’s active and subjective interaction to move the organizatoin toward success. Also Agile/Lean cannot be taught by text books and need to nurture people who can think for themselves in their context by sharing experience to communicate tacit knowledge. (I blogged about it here)

Then, how can we make such knowledge portable? The vehicle is also people. we need someone to convey that knowledge with leadership and propagate the leadership through the organization.

I think the ability or attitude of the leadership role in Agile and Lean is very akin to what Prof. Nonaka named “phronetic leadership”.

He says that effective strategic management needs distributed wisdom (which Aristotle called “phronesis”) in each member of the organization. Strategy is created out of one’s existential belief or commitment to a vision of the future, the ability to interpret one’s environment and resources subjectively, and the interaction between subjectivity and objectivity. These abilities need to be distributed among organizational members. Strategy as distributed phronesis thus emerges from practice to pursue “common goodness” in each particular situation since a firm is an entity that pursues a universal ideal and particular reality at the same time. Such idealistic pragmatism means that in a specific and dynamic context knowledge can be created and refined to become wisdom.
Aristotle’s three types of knowledge are;

• Episteme (Scientific Knowledge)
  Universal, context-free and objective knowledge(explicit knowledge)
  
• Techne (Skills and Crafts Knowledge)
  Practical and context-specific technical know-how(tacit knowledge)
  
• Phronesis (Prudence/Practical Wisdom)
  Experiential knowledge to make context-specific decisions based on one’s own value/ethics (high quality tacit knowledge)
  

Phronesis is a concept that synthesizes “knowing why” as in scientific theory, with “knowing how” as in practical skill, and “knowing what” as a goal to be realized. Unlike episteme, it emphasizes practices in particular contexts. However, phronesis is not just knowledge within a certain, particular context per se. Since it is knowledge to serve the “common good”, it implies an affinity with universal principles.

Prof. Nonaka presents six abilities that constitute Phronesis;

• Ability to make a judgment on goodness.
  
• Ability to share contexts with others to create *ba*(shared sense).
  
• Ability to grasp the essence of particular situations/things.
  
• Ability to reconstruct the particulars into universals using language/concepts/narratives.
  
• Ability to use any necessary means well to realize concepts for common goodness.
  
• Ability to foster phronesis in others to build resilient organization.
  

He quoted an episode of Mr. Honda, the founder of HONDA;

Honda was trying to develop the CVCC engine, which had lower emission and higher fuel efficiency. Souichiro Honda, the founder and then CEO of Honda one day told his engineers that the engine would finally give Honda the opportunity to beat Big 3. The engineers looked at Mr. Honda, and said, “Please, don’t say such a thing. We are not doing this to beat other guys. We are doing this for our children.” Mr. Honda was ashamed of himself, and said that he realized that he had become too old, and decided to retire.

(source: Ikujiro Nonaka "The Knowledge-Creating Organization & Leadershipis")

Further readings;

• The Knowledge-Creating Organization & Leadership(PDF slides)
  by Ikujiro Nonaka
  http://www.jica.go.jp/project/indonesia/0061565E0/05/pdf/01_02.pdf
  His slides showing the concept of Phronetic Leadership
  
• The Practical Wisdom of Ikujiro Nonaka
  by Sally Helgesen
  http://www.strategy-business.com/press/16635507/08407
  Interview with him regarding the concept
  
• The New New Product Development Game(PDF paper)
  by Ikujiro Nonaka and Hirotaka Takeuchi
  http://apln-richmond.pbwiki.com/f/New+New+Prod+Devel+Game.pdf
  The first paper which defined the word "Scurm" in product development.
  
• Managin Flow
  by Ikujiro Nonaka et. al
  http://www.amazon.com/Managing-Flow-Process-Theory-Knowledge-Based/dp/0230553761
  His latest book discussing phronesis
  
• Knowledge Creating Company
  by Ikujiro Nonaka
  http://www.amazon.com/Knowledge-Creating-Company-Harvard-Business-Classics/dp/1422179745
  His classic book about knowledge management.