Journal of Knowledge Management Practice, Vol. 8, No. 3, September 2007

Managing Tacit Knowledge In Organizations

Michael L. Irick, Indiana University-Purdue University of Indianapolis

ABSTRACT:

This paper examines potential ways to observe and manage the creation and exchange of tacit knowledge within an organization. Techniques such as communities of practice and the use of a shared workspace are evaluated using specific examples from a case study. In addition, the role of management is examined along with several approaches that can be used to facilitate effective knowledge sharing.

Keywords: Knowledge Management, Tacit Knowledge, Communities of Practice, Organizational Learning, Management Models


1. The Concept Of Tacit Knowledge

Tacit knowledge has been defined as one’s personal, internal or interior knowledge as opposed to the external, physical knowledge that has been written down or recorded as an artifact. Stephen Gourlay presents a clear definition of tacit knowledge as “a form of knowledge that is highly personal and context specific and deeply rooted in individual experiences, ideas, values and emotions” (Gourlay, 2002). The philosopher Michael Polanyi was the first to differentiate between the tacit, or personal knowledge, and the explicit, or external knowledge domains. Polanyi drew upon ideas originating from Plato to argue that knowledge is internally processed, and is embodied in one’s self (Gourlay, 2002). The French philosopher Philippe Baumard has provided the most extensive treatment of tacit knowledge for knowledge management and organizations. According to Baumard, tacit knowledge is important because expertise rests on it, and because it is the source of competitive advantage, as well as being critical to daily management activities (Gourlay, 2002). He argued that tacit knowledge could be an attribute of both individuals and of groups. A key challenge in organizational research has been whether it is possible to manage tacit knowledge, and how. By managing tacit knowledge, I refer to methods that can be used in order to facilitate the creation of tacit knowledge, and to externalize that tacit knowledge in a way that will be transferable to other individuals. The interplay of tacit and explicit knowledge is a critical factor in organizational learning. This article will examine potential ways to observe and manage the creation and exchange of tacit knowledge within an organization, using a recent case study as a point of focus.

2. Management Models For Tacit Knowledge

One approach to managing the creation and exchange of tacit knowledge is communities of practice. The primary task of managers is the conversion of tacit, human capital into explicit, structural capital. Communities of practice have been identified as the site where this alchemy can occur (Davenport and Hall, 2002, p. 209). A community of practice has been defined in simple terms as “a group that shares knowledge, learns together, and creates common practices. Communities of practice share information, insight, experience, and tools about an area of common interest” (McDermott, 1999, p. 34). A community of practice, as differentiated from other kinds of communities or groups, manifests coherence among three dimensions of its practice: a joint enterprise, mutual engagement of its members, and a shared repertoire of resources (Wenger, 1998). A community of practice is therefore different from a team or taskforce, which focuses on specific and/or temporary problems (Brohm and Huysman, 2003, p. 3). Communities of practice are not goal driven, like tasks and projects, nor are they necessarily deadline driven (Davenport and Hall, 2002, p. 181-182). According to Davenport and Hall, communities of practice provide a means of constructing “recipes” for knowledge development. It is just a matter of building certain structures, such as an intranet, and allocating personnel to those communities, where they will work together to facilitate knowledge development and sharing (Davenport and Hall, 2002, p. 209-210).

An example of communities of practice can be found in the case study “The Utopia of Communities: An Ethnographic Account of the Rise and Fall of Business Communities.” In this case study, Rene Brohm and Marleen Huysman describe the use of communities at C-Nox, a Dutch consulting firm. C-Nox began as a virtual organization, based upon the idea of a “network of professionals that are autonomous and self-organizing” (Brohm and Huysman, 2003, p. 5). C-Nox was focused on building an “intelligent enterprise”. In order to support this vision, three communities of practice were formed, referred to by C-Nox as “competency groups” (Brohm and Huysman, 2003, p. 6). These three groups were formed based on areas of interest and expertise: knowledge technologies (KT), human performance (HP), and management consulting (MC). These communities were formed for the creation and sharing of tacit knowledge. The management team asked the different groups to give concrete meaning to this knowledge in the form of business propositions. C-Nox project teams were responsible for implementing the business propositions that were created by the competency groups. The competency groups used a self-developed intranet as a tool for collaboration and communication. Employees worked from home or at the customer’s location. The groups organized half-social, half-work meetings with very little traditional structure, usually at pubs, restaurants, or at home (Brohm and Huysman, 2003, p. 6-11).

The communities of practice at C-Nox were not without problems. Knowledge management issues began to arise when economic and political problems started to take control. C-Nox was facing bankruptcy, the competency groups were aborted, and every consultant was to focus on becoming 100% billable. There was also pressure to produce as many business propositions as possible. The knowledge sharing environment was soured by the economic and political issues that were occurring. There were several tacit and explicit behaviors that were externalized by the individuals as well as the groups within C-Nox. The employees resorted to “gossip, finger-pointing, insults, and people explicitly ignoring each other” (Brohm and Huysman, 2003, p. 7).

Eventually, the communities of practice at C-Nox dissolved, except for one group, which continued to function as a community throughout these political and economic changes. This single group branched out on their own, using a holistic, independent approach, outside of the rest of the company’s strategy. This group was able to keep their identity and continue to function as a community of practice, and to maintain a fair level of autonomy. By the end of the study, this small group had been the only part in the organization that had been economically successful. Making up less than 15% of the entire company, they were responsible for 60% of C-Nox’s revenues (Brohm and Huysman, 2003, p. 15). These collective individuals were able to adapt to the political and economic conditions at C-Nox, and thus were able to survive. We can see from this example how a community of practice can be used to facilitate the creation of tacit knowledge and the sharing of knowledge amongst individuals as a collective group. If managed effectively, the community of practice can be a rich, nurturing environment that can produce tangible, external results in an organization, like the group in the C-Nox case study, which was able to bring in the majority of the revenues for the company. Management needs to acknowledge the important value that communities of practice can bring to an organization by allowing adequate attention and autonomy for these types of groups to grow organically in the creation and sharing of tacit knowledge.

Richard McDermott (McDermott, 1999, p. 36) offers several guidelines to managers in order to start and support communities of practice within an organization. He suggests:

      Focus on a few important topics. In order to leverage knowledge effectively, companies should begin with a few communities of practice that are focused on topics strategically important to the organization.

      Build on natural networks. Since communities of practice arise naturally in most organizations, utilize those existing networks of people who already share knowledge about a particular topic.

      Develop community coordinators and core groups that will organize and maintain the community.

      Support communities – managers need to give people the time and encouragement to reflect and share ideas with other teams.

      Be patient – communities of practice are organic, and take time to develop.

McDermott suggests the concept of a “double-knit” organization, which combines teams with communities of practice. According to McDermott, this approach links the organization in two ways: cross-functional teams focus on outputs (typically products), major processes, or market segments, and the communities of practice focus on learning within functions or disciplines, sharing information and insight, collaborating on common problems and stimulating new ideas. At C-Nox, the management team tried to utilize a “double-knit” approach with the competency groups that created the business propositions, and the project teams that implemented the business propositions. This approach may have worked if C-Nox had given adequate support to the building of these communities of practice. Instead, the economic and political pressures led to the management team’s decision to focus strictly on output of products and billable hours.

Another approach to managing the creation and exchange of tacit knowledge is the creation of a shared workspace, or environment, for the elicitation and sharing of knowledge. Ikujiro Nonaka writes about the concept of “ba” (a Japanese concept meaning “place”). According to Nonaka, “ba” can be thought of as a shared space for emerging relationships. This space can be physical (an office, dispersed business space), virtual (e-mail, teleconference), mental (shared experiences, ideas, ideals) or any combination of them. What differentiates “ba” from ordinary human interaction is the concept of knowledge creation. According to Nonaka, “ba” provides a platform for advancing individual and collective knowledge. Knowledge is embedded in “ba” where it is then acquired through one’s own experience or reflections on the experiences of others (Nonaka and Konno, 1998, p. 40-41). To managers, this means providing an environment, whether it is physical or virtual, that will lend itself to the creation and sharing of tacit knowledge.

According to Nonaka, there are two dimensions to tacit knowledge. The first is the technical dimension, which encompasses the kind of informal personal skills often referred to as “know-how.” The second dimension is cognitive. The cognitive dimension consists of beliefs, ideals, values, and mental models, which are often taken for granted (Nonaka and Konno, 1998, p. 42). Nonaka introduces the SECI model, or knowledge spiral, as a way to show how the interactions between explicit and tacit knowledge lead to the creation of new knowledge. The SECI model describes the dynamic process in which explicit and tacit knowledge are exchanged and transformed. Nonaka argues that this idea can be put into practice, using the concepts of “ba”. The four steps of the SECI process are socialization, externalization, combination, and internalization. Socialization involves the sharing of tacit knowledge between individuals. In practice, socialization involves capturing knowledge through physical proximity. Externalization involves the articulation of tacit knowledge; that is, the conversion of tacit knowledge into explicit knowledge. Combination involves the conversion of explicit knowledge into more complex sets of explicit knowledge. Finally, internalization is the conversion of explicit knowledge into the organization’s tacit knowledge (Nonaka and Konno, 1998, p. 42-45). Managers should be aware of this process when developing an environment for knowledge sharing in their organization. Knowledge is manageable only insofar as leaders embrace and foster the dynamism of knowledge creation (Nonaka and Konno, 1998, p. 53).

3. Observations Of Tacit Knowledge

A company is a living organism and can have a collective sense of identity and fundamental purpose. There are several kinds of behaviors that can be observed from individuals or groups within an organization. Some of these behaviors may be externalized, or converted from internal behaviors to external behaviors. Managers should be aware of these behaviors for the purpose of managing knowledge within an organization. More specifically, these behaviors can indicate potential strengths or weaknesses in the knowledge environment of an organization. Philippe Baumard has defined four different categories of knowledge, and the observable behaviors that can be exhibited in each. These four types are: observed explicit individual behaviors, observed explicit collective behaviors, observed tacit individual behaviors, and observed tacit collective behaviors (Baumard, 1999).

Observed explicit individual behaviors include lying in wait, explicit avoidance, attempting to verbalize the situation, conflict seeking, showing awareness of the situation, and a focus on problem solving (Baumard, 1999). Several examples of these behaviors can be seen in the C-Nox case study. For example, the competency groups at C-Nox exhibited explicit avoidance when individuals purposely avoided each other. Conflict seeking and attempts to verbalize the situation were also observed as individuals resorted to gossip, finger pointing, and insults (Brohm and Huysman, 2003, p. 7).

Observed explicit collective behaviors include collective involvement, collective avoidance, deliberate sharing of knowledge, formation of a team or task force, and striving for collective sense making (Baumard, 1999). Observed explicit collective behaviors in the case study include formation of a team or task force, collective involvement, and striving for collective sense making as the groups were originally formed based on different interest areas. The competency groups showed collective involvement as they worked amongst themselves, but also tended to collectively avoid the other groups after problems began to arise within the C-Nox organization (Brohm and Huysman, 2003).

Observed tacit individual behaviors include floating attention, infiltration, automatic behavior, reflexes or instincts, resentments, suppressed conflicts, web of tacit relations, mixed feelings, or thriving on chaos (Baumard, 1999). In the case study, individual tacit behaviors included floating attention, resentments, and mixed feelings as certain individuals showed resentment towards C-Nox. In addition, when one of the group leaders became part of the management team, mixed feelings and behaviors of resentment and suppressed conflict were also observed (Brohm and Huysman, 2003).

Observed tacit collective behaviors include communities of practice, things are done without needing explanation, network of tacit understanding, collective orientation is sought, atmosphere is uncomfortable, inference and insinuation, or emergent attitude of knowledge sharing (Baumard, 1999). Within C-Nox, there were several observed tacit collective behaviors, such as the formation of the communities of practice (competency groups). Also, an uncomfortable atmosphere emerged as fighting and avoidance among groups became explicit. Several inferences and insinuations about competing groups were observed, leading to a negative impact on the organization (Brohm and Huysman, 2003).

4. The Role Of Managers

It is the role of managers to encourage and support the creation and exchange of tacit knowledge. Managers should act as “knowledge brokers,” contributing to the diffusion of knowledge across and between communities. Nonaka and Konno suggest that the role of the broker is essential to the interplay of tacit and explicit knowledge. It is the role of top management to be providers of “ba” for knowledge creation (Nonaka and Konno, 1998, p. 53). Several ways that tacit knowledge can be managed have already been offered. For example, managers can offer assistance in the creation and continuation of communities of practice, they can provide a shared work environment that is conducive to the advancement of individual and collective knowledge, they can utilize the “double-knit” strategy that McDermott proposes, and managers should be aware of the observed behaviors that indicate how knowledge is being shared in the organization. These are all ways that a manager can facilitate the conversion of human capital into structural capital by turning the internal, tacit knowledge into external, explicit knowledge.

More specifically, there are several techniques that managers can use in managing tacit knowledge. One way is for managers to offer personnel training and exercises to allow the individual to access the knowledge realm of the group and the entire organization. For example, training programs in larger organizations help trainees to understand the organization and their roles in the whole (Nonaka and Konno, 1998, p. 45). Teaching people new concepts or methods for how to share knowledge can be useful.

Additionally, managers need to provide motivation for knowledge sharing activities. The willingness to share anything usually depends on reciprocity. Therefore, “knowledge management strategies need to be linked to people by building reward and recognition programs to encourage employees to share best practices, strategies, and ideas” (Davenport and Hall, 2002, p. 186). A manager may explicitly reward an individual who participates in knowledge sharing activities in the form of a tangible benefit, such as increased pay or bonuses in the forms of cash or stock options (Davenport and Hall, 2002, p. 187). Instead, employees may be rewarded in more subtle ways, such as enjoying the personal satisfaction of holding membership in a thriving, knowledge sharing community. Human concerns about reputation and status lies behind an important “soft” reward for knowledge sharing activities, such as acknowledgement from peers (Davenport and Hall, 2002, p. 189).

In addition to rewards, organizations can set up a range of other types of incentives to encourage knowledge sharing. These include making knowledge sharing part of the job of each individual, encouraging employees to work in groups as communities, allowing experimentation and risk-taking, and providing tools for these activities (Davenport and Hall, 2002, p. 190). In the C-Nox study, employees used a self-developed intranet as a tool for collaboration and communication (Brohm and Huysman, 2003, p. 5). Managers are responsible for providing these types of incentives and tools that are needed to facilitate knowledge sharing activities.

Also, time spent in working hours on knowledge sharing activities should be regarded as legitimate (Davenport and Hall, 2002, p. 191). This may require a significant change in mindset on behalf of managers and their employees. In fact, time should be set aside specifically for individuals to learn, share, and help one another. Leading by example can also have a positive impact on knowledge management (Davenport and Hall, 2002, p. 191). Managers should be positive role models in the knowledge sharing process. This will help to build trust, which is critical in the knowledge sharing environment. Each contribution to knowledge sharing increases not only the amount of knowledge, but also trust among community members. As trust increases, more participants will become willing to share, and further contributions will be made (Davenport and Hall, 2002, p. 192).

Further, the knowledge sharing depends upon social interactions. The easier it is for individuals to interact, the more likely that interactions will occur (Davenport and Hall, 2002, p. 193). Managers can use the following techniques to improve the ease of social interaction: clear rules on the operation of the community, a shared language, social events, and physical co-location of staff (Davenport and Hall, 2002, p. 193). In addition to how easy it is to interact, the perceived usefulness of interacting is also a primary motivation. The provision of a suitable technological infrastructure, such as an intranet, for knowledge creation and sharing is thus important (Davenport and Hall, 2002, p. 195).

In the C-Nox case study, managers did not effectively utilize many of these techniques, and thus, the knowledge sharing process for the most part did not survive. At the beginning of the case study, the management team was focused on establishing communities of practice built on trust and autonomy. Then, during economic and political pressures, they began to lose sight of the importance of these groups, focusing instead on billability and on producing products. The management team at C-Nox no longer granted the groups the time that they needed for knowledge creation and sharing, and they destroyed the trust that was built within the groups. The management team did not reward the communities of practice, but took rather the opposite approach in condemning their work. They viewed the communities as “just theoretical activity” and as being of little use to the actual business practice (Brohm and Huysman, 2003). The focus of the intranet became a commercial product rather than a tool for sharing knowledge. The management team made many mistakes that led to the downfall of the knowledge environment in the organization.

5. Conclusion

The interplay of tacit and explicit knowledge is a critical factor in organizational learning. It is the role of managers to contribute to this interplay of tacit and explicit knowledge, and to act as “knowledge brokers” within the organization. The primary task of managers is the conversion of tacit, human capital into explicit, structural capital. Communities of practice have been identified as the site where this alchemy can occur (Davenport and Hall, 2002, p. 209). This report has examined several potential ways to observe and manage the creation and exchange of tacit knowledge within an organization, using the C-Nox case study as a point of focus. The C-Nox example cannot be construed as representative of every organization, but certainly provides a good example of some of the issues and problems common in many of today’s organizations. There is still a great deal of research to be done in this area, and additional case studies that examine the management of tacit knowledge within organizations would be beneficial. However, I believe that it is possible for managers, at least to some extent, to be able to manage the creation and sharing of tacit knowledge by using the methods and techniques presented in this article.

6. References

Baumard, Philippe, 1999. Tacit Knowledge in Organizations. Thousand Oaks, CA: Sage.

Brohm, Rene and Marleen Huysman, 2003, The Utopia of Communities: An Ethnographic Account of the Rise and Fall of Business Communities. In 5th International Conference on Organizational Learning and Knowledge. University of Lancaster, June 2003.

Davenport, Elisabeth and Hazel Hall, 2002, Organizational Knowledge and Communities of Practice. In B. Cronin (Ed.) Annual Review of Information Science and Technology, 36, Information Today Inc., 171-227.

Gourlay, Stephen, 2002. Tacit Knowledge, Tacit Knowing or Behaving? 3rd European Organizational Knowledge, Learning, and Capabilities Conference, Athens, Greece, 5-6 April.

McDermott, Richard, 1999, Learning Across Teams. Knowledge Management Review, 8, 32-36.

Nonaka, Ikujiro and Noboru Konno, 1998, The Concept of ‘Ba’: Building a Foundation for Knowledge Creation, California Management Review, 40(3), 40-55.

Wenger, Etienne, 1998, Communities of Practice: Learning, Meaning, and Identity. New York: Cambridge University Press.


About the Author:

Michael L. Irick is a Senior Systems Analyst at The HealthCare Group, LLC. He is also an adjunct professor in the Computer and Information Technology department at Indiana University-Purdue University of Indianapolis. He can be reached by mail at 8802 North Meridian Street, Suite 100, Indianapolis, IN, 46260. Phone: 317-705-3213. Email: mirick@iupui.edu