How Tacit Knowledge can be used to improve organisational performance.

stoik musah,
LBS,Leicester.
stoikmusah@gmail.com

This essay will describe how tacit knowledge management practice can be utilized in an organisation to improve its organisational, market and financial performance alongside how there is more competitive value to its practice as opposed to explicit knowledge. With emphasis ascertaining the application of the various model/framework to tacit knowledge management practice in the organisational context. With reference to the above, the way business and organisational activities are carried out is increasingly changing, as recent years has seen an unprecedented growth in the speed of product and service change as a result of the application of information (Gulati and Zajac 2000). This increasingly turbulent environment has forced organisation to become more interested in new ways of gaining and sustaining competitive standing in the product and service they offer. Firms tend to devise continual strategic change process to manage and mobilized its resources through time for a competitive response. In this situation, the capacity of a firm to identify and understand the nature of competitive force and how they change with time will contribute to its competitive standing (Hosley, Lau etal 1994).Similarly the increase efficiency resulting from the process cited above allows for firms to specialize in the value creation activities supported by their own distinctive competence and knowledge (Janillo 1988,Langlois and Robertson 1995,Park 1996).To effect this process organisation engage in backward integration of breakthrough innovation in its human capital resources for deeply held and highly personal form of knowledge emerging most often, from the creative power of the mind(Mascitelli 2000).It is believed that a firms capability of effectively utilizing this source of knowledge to provide insight for creating value for customers need will provide significant impact on its market and financial performance.


However this concept of value has been given different shades of meanings by authors as Hakasson and Snehota (1995),Norman and Ramirez(1993),Porolini(1999) and Porter(1985). The central core issue among these various literature studies on this subject is in the area of in-depth knowledge on the value system and activities provided by organisations resources and to what extent can these value activities be effectively utilized. As value activities are essentially based on knowledge –the value of determination and motivation from employees is also related to the level of codification of that knowledge .The aspect of how well known, the capabilities underlying the value activities is related to- how easily the underlying knowledge can be assessed and shared among employees. Although such original thinking may manifest itself in a variety of ways .This has caused both scholars and Human Resource Practitioners to dig deeply into the source of creativity and insight. The works of Mascitelli (2000) reveals evidence of studies that highly creative artists, scientist, mathematicians etc often displays exceptional intelligence most often when confronted with a task. Mascitelli(2000) provides a plausible explanation for exceptional intelligence as above with reference from the works of Polanyi (1996) on “Tacit Dimension”. Polanyi(1996) argues that the portion of individual knowledge that is readily accessable to us is only a small fraction of the totality of our knowledge.The writer asserts that, in a sense, the knowledge that we can express in speech and in writing is only the tip of the entire human intellectual framework. Beneath the surface of conscious thought lies a vast proportion of tacit knowledge derived from a lifetime of experience ,practice ,perception and learning .

To Polanyi(1996), the essential nature of tacit knowledge embodies a lifetime of experience, indwelling by the innovator ,with the particulars of his chosen field, such that it becomes an intrinsic part of his mental makeup. This particulars, impact a kind of vision of things not yet known. In a sense, tacit knowledge allow you to see solutions without the conscious ability to explain your vision to pursue your aspiration by your action. From the standpoint of the firm, tacit knowledge problem solving skill is evident and seen in the multidisciplinary problem solving skills of Senior Researchers and Project Team leaders to develop visions that transcends precise details and subjects, thereby enabling the fusion of multiple facets of scientific knowledge for practical purposes and work processes. In the same way Quinn(1992), in his work on “Managing Proffessional Intellects” posit that pure invention most often is in the area of specialty of such highly capable individual. This is because they are best able to recognize the interrelationships among technologies required for value creation and move in the direction to visualize and provide complete solution to it. This is contrary to the views of the relationship between action and tacit knowledge explored by Hedesstrom and Whitley(2000), who argues that tacit knowledge is merely difficult to explore by the knowledge bearing expert to provide solutions to managerial concerns. What they put forward as a basis for their argument was that tacit knowledge almost from its definition can not be codified, in essence: because of where it is –typically in the minds of individuals. To them tacit knowledge is the knowledge you never see. This claim emerge from a similar distinction made by Sutton(2000) in his work on” knowledge and Conscious Execution of Task”. Sutton distinguish between the human state in conscious execution of a task and the human state in unconscious execution of same task. To Sutton unconscious knowledge cannot be directly assessed. If this being the case, how do you trust judgement from such human mental state .To Sutton how does reason prevail to make sense out of such judgement. Clarification was given on the above assertion by Zander and Zander(1993)that they maybe, infact possibilities of directly accessing this unconscious knowledge when it is converted to other form,so as to utilize the specific action in it, which an organisation can benefit from under certain conditions i.e management routine practice, specific human interaction context, when the pace performance is slow and pace variations are tolerable by the individual and when a standardize controlled context for the performance is assured( Zander and Zander 1993 cited in Howells 1999).

Similarly other related ideas were drawn from the works of Collins and Kush(1998) who in Hedesstrom and Whitley sense argue that, since tacit knowledge is personalised, and it resides in the mind of an individual. Once it is processed in the mind of individuals it becomes information. When this information is articulated or communicated to others in the form of data via computer output or written words then the conversion process can occur as discussed in the works of Zander and Zander (1993).Under this circumstances, in the organisation context, informations that are express in the above form is said to appear in explicit form or source of explicit knowledge.In the organisation, explicit knowledge is technical and carefully codified in a hierarchy of database or manuals (Smith 2001).For example explicit knowledge implies factual statements about issues as material properties, technical information, and routine manual instructions. Unlike tacit knowledge, explicit knowledge has the potential to explain why things work. As a result of the ease to communicate and store explicit knowledge in the organisation, there is little chance of losing explicit knowledge stored in files, since it is available in organisational repositories. Such knowledge can be accessed and used easily by anyone in the organisation unlike tacit knowledge(Grant1996).In this regard Hall and Andrrani(2003) argued that explicit knowledge is internally safe. However, plausible as this seems, explicit knowledge management practice in the organisation amidst heavy market competition involves heavy investment in electronic systems (Eginton 1998; Sbarcea 1998).Alternatively if that being the case, a vast space is needed to keep documents. In this regard Boral(2002) argues that this involves excessive documentation. Far greater than this is that, there is a high risk of imitation –if competitors gain assess to these document; leading to the loss of actual competitive advantage. In this situation explicit knowledge is externally vulnerable(Hall and Andriaini 2003).At this end, if we contend that the knowledge base of an organisation between the two ends over emphasis one at the expense of the other – a paradox exist, which leads to the question of which among tacit and explicit knowledge there is more competitive value in facilitating its exploration and management in the organisation, amidst the accelerating dynamics of market environment. Following this reasoning several scholars argued that tacit knowledge occupies the centre stage in the development of more competitive value (Nonaka 1991).

These authors offer analogies between breakthrough innovation and artistic creation. They affirm that the relationship between these two forms of knowledge expression is truly intimate. But still innovators, often have a difficult time expressing in words a vision derived from years of experience and indwelling- which brings to the fore again, the distinction among the two knowledge forms. They(Innovators) often experience a compelling desire to express themselves to pursue a hidden truth that demands talents to be revealed .To this end creating value in future market may become increasingly dependent on the ability of innovators to exploit tacit knowledge as a medium for forming deep connection with customers needs. This is because, the merging of tacit knowledge logical insights with an emphatic understanding of human needs has the potential to capture market attention and inspire customer loyalty. In practice when this singular act is reinforced by appropriate managerial actions, the capacity of employees to merge multiple sources of tacit knowledge into a breakthrough product can represent a truly unique competitive advantage and value to the organisation (Mascitelli 2000).


Strategically from the standpoint of the firm , the tacit knowledge content in the heads of employees can be a powerful source of great insight to creativity. The ability of the organisation to nurture such knowledge source may be more important to longterm competitive value than the benefits of even the most successful business product line of the organisation. Recent literature studies has emphasise the importance of this form of knowledge assets(Quinn 1992;Burton 1995). Quinn (1992) posit that tacit knowledge intangibles as know how, design expertise, market insight e.t.c largely determine the value of most product .A good illustration of such knowledge base tangibles and its antecedent effect is the significant effect company loyalty card take part in , among major UK retailers operations today. Contrary to the popular belief that Tesco Plc competitive advantage in the UK is its economy of scale- is that the clubcard which conveys an array of material benefits across virtually every discipline of its business is Tescos most potent weapon in the UK retail industry(Financial Times 11/12/2006).With the loyalty card which was introduce by Tesco ,you can gain insight on a customers shopping habit and you can judge his/her social class. Brand managers can track who is buying their products or responding to promotion and in turn make better decision.

This was a strong concept generated by creative minds from the companys knowledge assets which was first treated with scepticism by other retailers when it was first introduced by this company. By the time other retailers realized that the loyalty card is the big brother of the shopping world –the company was far ahead of these retailers. Although the concept has being copied by other retailers-core capabilities as well spring of innovation as the above concept from employees, are so steeped in the tacit cultural social and intellectual environment of a firm that they cannot be discern by outsiders (Leonard Barton 1995).In his work on “The Wellspring of Knowledge” Leonard Barton (1995) quoted a company CEO of suggesting to take his rival competitors on a detail tour of his facility and give away nothing, this is because they cannot take the knowledge and insight home with them. Infact the major drawback for the case of explicit knowledge as a useful competitive knowledge tool is its vulnerability to being transferred easily. Unlike tacit knowledge that is difficult and costly to transfer, making it considerable less mobile than explicit knowledge, as a result firms can possess unique capabilities that are hard to copy and invisible to outside observers. This can be carried out by personalising or codifying this particular type of knowledge using information technology support tools depending on the balance of series of competitive strategic knowledge management options applied by organisation (Alavi and Leidner 1999).The application of the codification strategy allows knowledge to be distinct and independent of individuals. While knowledge management strategy as personalisation allows the channelling of individual strategies to the right place when it is needed. Knowledge management strategies involving codification can be well facilitated by technologies as database. For example Accenture Knowledge Space System Database -where descriptions of management consultant interventions and outcomes are described, alongside Xeros Eureka Database System –where the experiences of service engineers are captured is a good illustration of the above knowledge management strategy practice by organisations(Quin, Andersen etal 1996). Similarly the popular Mckinsley Institute Development Network Database which is utilized by its users and members to facilitate organisational learning still fall under this category.


By contrast the personalisation of tacit knowledge are often sparingly supported by technology because of the nature of its form –they have a greater emphasis on specific human interaction and relationship building(Connell,Klein etal 2003).The works of Alavi and Leidner (1999) on “Knowledge Management System Challenges” highlight clarifications on the above subject.They argued that for one persons personalised knowledge to be useful to another, such knowledge must be communicated in such a manner as to be interpretable and accessible. Since knowledge management is a systemically organized process of acquiring, organising and communicating tacit knowledge of employees for usage and accessability by other employees for effective work functions. Put differently this suggest that if a cognitive intellectual activity to tacit knowledge management practice is adopted, Brown(1998) argues that; then the issues facing those responsible for its management are less related to creation, innovation and value added but more concerned with capture and integration. Such a perspective is contrary to the definition of knowledge management from a systemic view and its transfer perspective. On the other hand if knowledge cannot be shared , it will inevitably have limited organisational value. However Daveport and Prusak (1998) considers issues as these cited by Brown(1998) can be redressed by attending to cultural issues eminent within the organisation .They emphasised that, this can be facilitated by making knowledge more visible in the organisation by developing and encouraging activities such as knowledge sharing. For instance Ernst and Young Incentives to stimulate knowledge sharing are used in routine work performance reviews. Employees who spend a lot of time helping each other and adding to the corporate knowledge base are openly rewarded and recognized (Wah 1997).Besides Merrill Lynch rewards its employees for sharing knowledge with others based on how much direct help they give colleagues. The degree of high quality person –to-person dialogue a partner has with others can represent as much as one quarter of his or her annual salary (Quinn,Anderson. etal 1996; Hansen, Nohria. etal 1999).In the same way Andersen worldwide shares its knowledge among its customers anywhere in the world through its ANET electronic system links of 82,000 people operating in 360 offices in 76 countries (Quinn.,Andersen,etal 1996). Similarly to add value in an organisational context , tacit knowledge utilization management process, involves stimulating creativity and innovation within people and intergroup function ( Harrison 2002).It involves putting knowledge source (people) in the right direction , developing their commitment to listening to the voice within , and providing data to demonstrate the improve result achieve( Harrison 2002).

However there are different and relative model framework to which tacit knowledge can be utilized to add value to the organisation. Perhaps the most revealing works on tacit knowledge was performed by Nonaka and Takeuchi (1995), and a similar work was also performed by Talcott Parsons (1951) in organizational learning systems model and general theory of social action. One peculiar aspect among these models is the emphasis on specific organisational factors which gave the models significance in their application. These factors- if when influenced by effective knowledge management practice in line with organisational human resource management practice in the work place, will help enhance the capability of the whole organisation to make significant progress. This factors are further categorised into factors within the individual(knowledge source) and situational factors outside the individual. Factors within the individual comprises of intangible resources as memory, communication, and motivational system while situational factors outside the individual consist of issues as leadership style and organisational culture, in other words factors which more or less describe the situation in which tacit knowledge is utilized(.Koshinen 2003). Memory system consist of ones experience, mental models and intuitive ability. It is believed that multi faceted experience of an individual increases his or her possibilities to solve problems arising in a task. That is, the capability of an individual to solve a problem is dependent on the richness of his or her existing knowledge structure(Lyles and Schwenk 1992; Bower and Hilgard 1981).The mental model on its part, provides the context to view and interprete new material information(Argyris 1989,Kim1994).Mental models can be developed in the workplace if there are constant provision for teamwork where participants engaged in cross fertilization of ideas. Similarly it is also important to know that the tacit knowledge resource of an organisation rest within the mental models of its personnel. From the aforementioned analysis discussed so far, what is critically important in the application of these factor is –if it is well identified by human resource practice in the workplace .This will be of valuable help to make a perfect fit to what is required from the work environment to bring about innovative ideas of value.

Intuition on its part is the end product of tacit knowledge acquisition (Reber 1989). It operate to assist an individual to make choices and to engage in a particular class of action –to have a sense of what is right and proper, and “to get a point” without really able to verbalize what it is that one has gotten (Reber 1989). For example innovators have rich intuitions about complex problems which they can not explain how they come about the situation in details (Stahle and Gronroos 1999;Cooper and Sawaf 1997).Individuals with deep insight as the above are common in most organisation. It is believed that records and experience will help to identify these individuals and engage them in organisational roles which will help them stimulate these qualities, particularly organisational roles in operational research and development. Similarly the practice of interaction through face to face communication allows organisation personnel to get to know each other through building and maintenance of strong social networks that generate trust and commitment. Put differently, through constant communication people learn to trust each other. Koskinen (2003) stress that they can depend on one another, regardless of the situation. This kind of relationship build organisation social capital, which provide the foundation for sharing tacit knowledge that creates the conditions necessary for high task performance. In the same way (Weick 1995) stress the need of close proximity to foster communication in his works on “Collective Mind in Organisation”. He posit that if people want to share meaning it needs to be carried out in a place they choose where they can talk about their shared experience in close proximity. Architectural design and physical building which regulate this social interaction should be removed. Furthermore factors such as commitment and trust are important functions and motivational components that affect the willingness and openness of people in harnessing tacit knowledge in an organisation (Senge 1990). Several literature studies of motivational theories abound in organisation behaviour study, where employees can be bounded to work task /duties by the organisation, and these are content theories, process theories, and equity theories(Pionton 2006).Within these theories, knowledge creation is anchored in the commitment of its holder and receiver. This implies that knowledge is related to human action stemming from individuals level of motivation to the task(Nonaka and Takeuchi 1995).

Furthermore the possibilities and willingness of people to share tacit knowledge in the organisation in a way which will be of valuable benefit to the organisation financial and market performance is for the organisation to provide them with an environment that allows learning and innovation to flourish (Drucker 1993). This is made possible when the organisation leadership style connotes support for emerging processes with collaborative altitudes and skill towards reinforcing reciprocal relationships that facilitates dialogue and learning(Nonaka 2000, Jones 1996). In the light of the above it is believed that the leadership that create new knowledge is largely a matter of giving the people creative freedom within a framework devise by the leader (Koskinen 2003).In addition the cultural web theory highlight in precise terminologies the underlying ways of life of people in an organisation, alongside the set of management practice and behaviours that both exemplify and reinforce these ways of life in the organisation(Denison 1990). For this reason organisational culture has a major role in facilitating how tacit knowledge in an organisation can be an added value to organisation overall performance. Within this concept emerge the organisations shared values and visions –which is vital for the organisation .This is because they provide the focus and energy for knowledge creation. On the basis of the above discussion, it can be asserted that organisational culture stabilizes a firms way of operation which inturn supports the initiative and effort of individuals in their work( Marijosola 1991).


Consequently as product and service becomes increasingly knowledge intensive, the means of making profits and competing in the marketplace is to become an effective learning organisation- profit and product remain the goal, but it is continous learning that enables growth (Owen 1991). To achieve and sustain competitive and added value requires organisations to learn better and faster amidst ever changing market environment. For this reason the knowledge base of a learning organisation should continuously engage in Tacit knowledge learning processes to acquire, capture and re use knowledge. This process of knowledge is integral to work activities to improve processes and results. Recognizing the dynamic nature of this phenomenon involves all those internal and external factors previously discussed, in the models to the application of tacit knowledge in the organisation .Accordingly, the intense competition in the corporate landscape and critical academic literature studies on this subject introduced in this essay cannot help, but reveal the increase attention paid to tacit knowledge in todays corporate world of business. Tacit knowledge makes work go smoothly, it increases the quality of the work and it often characterizes a master of his/her profession. For this reason, the critical task for Human resource development is to develop resourceful humans able to access and use the tacit knowledge learning resources around them. Together these factor create understanding on how the organisation knowledge management process in relation to tacit knowledge creation can be effectively utilized.














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Stoik Musah writes from LBS.
stoik_joy@yahoo.com