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Knowledge management: why tacit knowledge is dangerous

Published 5th April 2017 by Melissa Farrington
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What is knowledge management?

Knowledge management is the contextualisation, management, storage, retrieval and sharing of knowledge within an organisation. It focuses on the optimal use of knowledge: how can we, as an organisation, use the knowledge we have to best achieve our objectives?

A key aim of knowledge management is to prevent knowledge loss. Organisations hate knowledge loss because knowledge is part of what makes them successful and if they lose this knowledge, the benefit they got from that knowledge is also lost.

Knowledge loss is common when employees leave and especially common with regard tacit knowledge, an important form of knowledge that has the biggest bearing on organisational success.

What is tacit knowledge?

First, what is explicit knowledge? This refers to rules, procedures and facts that are easy to transfer from one person to the next. This is one of the two forms of knowledge in organisations.

With regard tacit knowledge, Hvorecký, Šimúth and Lipovská (2015) define it as “personal experience, perceptions, insights, aptitudes and know-how that are implied or indicated but not actually expressed - they are hidden in the minds of their owners.”

Unlike explicit knowledge, tacit knowledge is hard to transfer from one person to the next. It is often used to help us make use of explicit knowledge in optimal ways.

In organisations, for example, there may be a factbook of insights and conclusions about the company’s target market, including demographic data, where they’re likely to make purchases and what emotions they respond to in advertising. This is explicit knowledge: this document can be passed around the organisation quickly, raising everyone’s knowledge about the customer.

But tacit knowledge defines how this target market information can be used to optimise the organisation’s products, services, purchasing channels, advertising campaigns, PR, website and all the other things that should be aligned closely with the target market. It would be a much harder job to write down how to do this.

Outside organisations, facial recognition is a commonly-cited example of tacit knowledge: we can pick out one face in a million, and although we’re conscious that certain differences may explain our ability (mouth shape, eye colour) these things happen instantly. You couldn’t pass on the process to an alien who lacked the ability to recognise faces.

Why is tacit knowledge an important topic in organisations?

Explicit knowledge is easy to manage: it can be summarised, written, recorded, put in a document and generally shared easily. This means that when employees move on, the explicit knowledge they have can be transferred to the rest of the company. Great news.

However, because you can easily summarise, copy and distribute explicit knowledge, it’s not as valuable to organisations. People can copy it easily. Often it’s freely available online. But tacit knowledge is very valuable to organisations, because it’s part of their unique recipe for success, their secret formula for doing things.

And because organisations are increasingly defined by knowledge work, where success comes from convergent thinking, divergent thinking and creativity - all processes which make vast use of tacit knowledge - they are increasingly concerned with keeping hold of all this tacit knowledge if employees move on or join competitors.

Basically, more and more of a company’s success comes down to tacit knowledge, making it a hot topic.

Tacit knowledge: the secret sauce of star performers

Organisations naturally want to distribute this tacit knowledge throughout the organisation so everyone can perform at a higher level.

The collaboration movement is pushing organisations towards greater organisational sharing, often using learner-centric environments combined with learning management systems and enterprise social networks to encourage people to share tacit knowledge in archived and indexed environments that can be searchable in future, and to more widely use skills like mentoring and coaching to spread tacit knowledge.

But there’s an opposing force. Tacit knowledge is what makes high performers in knowledge work stand out from the crowd and demand higher salaries.

These employees want to help other people succeed, but they’ve spent time cultivating their way of doing things, and to spread the knowledge would reduce their own value in the talent market.

Tacit knowledge: why is it dangerous then?

Organisations want tacit knowledge out in the open and available to all so all employees can benefit from the productivity improvements that strong or market-leading tacit knowledge can deliver.

The move towards collaboration and open learning environments has leapt ahead of the reward debate and in many organisations the frameworks used for reward are still focused on individual performance. Organisations are therefore asking high performers to distribute the knowledge they use for individual performance to raise the tacit knowledge levels of others without rewarding them for sharing knowledge and being collaborative.

In this instance, It has the potential to cause attrition if employees feel there is too much pressure to share their own approach to outperformance in the workplace. Organisations may find employees hoard or shield their tacit knowledge, and in the worst cases, move onto competitors where they use their tacit knowledge of the previous organisation to improve their new employer’s product or services.

We must have open and honest debates about tacit knowledge in the workplace and ensure that people do not feel unfairly rewarded for sharing the seeds of their knowledge cultivation and work to date. Reward practices must fairly recognise the sharing of tacit knowledge.

Ultimately, people tend to feel quite protective of their tacit knowledge and we need to face up to this to get the most out of people in collaborative environments.