Dynamic fractal organizations for promoting knowledge-based transformation – A new paradigm for organizational theory

How can a company become sustainably innovative? We propose that the company needs to have organizational forms that achieve a dynamic synthesis of knowledge exploration and exploitation. In this paper, we present the “dynamic fractal organization” as a new organizational model. This model departs from the conventional information processing paradigm. Instead, we present a new frontier in organizational theory: the “dynamic fractal organization based on dynamic ‘ba’.” Dynamic fractal organizations build and utilize a triad relationship of knowledge that integrates and synthesizes tacit and explicit knowledge and creates a third type of knowledge, phronesis. The triad relationship is an upward spiraling process of converting tacit and explicit knowledge, and propels sustainable knowledge transformation across the diverse boundaries within and between organizations, and their environments.