28 June 2014

Guest Blog: Jack Reid gives a brief outline of tacit knowledge and its importance to professional services and B2B firms.

In service firms, the raw material is often not a tangible item but the capability and expertise of the staff that work there. The importance of this knowledge to these firms has placed increasing emphasis on transfer of knowledge, as it is the currency by which these firms operate and the crucial factor that gives them their competitive edge. While some of the know-how held by these firms is codifiable (for example, knowledge found in training manuals, text books, regulatory documents, etc.) and therefore easily transferable both inside and outside the firm, much of this capability is not. And it is this knowledge, that cannot be easily transferred, that is known as tacit knowledge.

But this still is a relatively vaguely descriptor as to what exactly tacit knowledge is. In order to find the best explanation of tacit knowledge, we can turn to Michael Polanyi. Polanyi explained tacit knowledge as the concept that “we know more than we can tell” (cited in Gertler, 2003). This can be further elaborated in two points; firstly, the tacit dimension of our knowledge exists in the background of our consciousness. We are observing a set of rules that we ourselves are not aware of. Skilled swimmers, for example, are often not aware they are keeping their lungs full of air to increase buoyancy. Another example, would be to think how you would explain to someone who has never cycled how to a ride a bike. Therefore, to teach tacit knowledge one must first achieve self-awareness of the knowledge one wishes to transfer. The second reason tacit knowledge can be so difficult to transfer is that language itself is insufficient to explain tacit knowledge.

So tacit knowledge defies articulation – as either the performer is not fully aware of the secrets of a successful performance or codes of language are not well enough developed to permit clear explication (Gertler, 2003).

Gertler (2003), himself, identified three key issues to do with tacit knowledge: firstly, how to produce it secondly, how firms can harness it and finally the best ways to reproduce tacit knowledge within an organisation.

How to produce it?

Tacit knowledge is produced both privately and socially. In a private dimension tacit knowledge production rests on education and training, as well as hiring workers with a high absorptive capacity for knowledge. While socially tacit knowledge is produced through social interaction both within and outside the firm.

How to find and appropriate it?

Attempts to find tacit knowledge have often centred around focusing on regions where a lot of tacit knowledge is shared and produced, the most prominent example of course being Silicon Valley for tech firms, but can just as easily refer to advertising clusters in Soho, or the UK motorsport valley clustered around Oxford. Another recurring firm when it comes to the problem of finding tacit knowledge is how to transfer tacit knowledge from the individual to the organisation, for example how to allow tacit knowledge acquired during execution by shop floor workers to feed back to their managers.

How to reproduce or share it?

The transmission or diffusion of tacit knowledge is far from a straightforward concept, as it often requires a deep and close interaction between the two parties involved. However there is very little consensus at the moment as to specifics of what this interaction entails. While some argue that seeing as tacit knowledge is best shared through face-to-face interaction that spatial proximity is key (reinforcing the ideas of business clusters), others argue that relational, institutional, and organisational proximity can be just as important.

To best harness tacit knowledge, firms need to establish a community of knowledge, which individuals can be connected both formally and informally.

Further Reading

Gertler, M., 2003. Tacit knowledge and the economic geography of context, or The undefinable tacitness of being (there). Journal of Economis geogrpahy, 3(1), pp. 75-99.

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