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Tacit Knowledge as a Source of Competitive Advantage

Tacit knowledge underlies many competitive capabilities. The experience, stored as as tacit knowledge, often reaches consciousness in the form of insights, intuitions, and flashes of inspiration. The marvelous capacity of your mind to make sense of your previous collection of experiences and to connect patterns from the past to the present and future is essential to the innovation process. "The creativity necessary for innovation derives not only from obvious and visible expertise, but from invisible reservoirs of experience."¹

Tacit knowledge, or implicit knowledge, as opposite to explicit knowledge, is far less tangible and is deeply embedded into an organization's operating practices. It is often called 'organizational culture'. "Tacit knowledge includes relationships, norms, values, and standard operating procedures. Because tacit knowledge is much harder to detail, copy, and distribute, it can be a sustainable source of competitive advantage... What increasingly differentiates success and failure is how well you locate, leverage, and blend available explicit knowledge with internally generated tacit knowledge."³

Inaccessible from explicit expositions, tacit knowledge is protected from competitors unless key individuals are hired away.

Innovation Process: Diversion and Conversion of Ideas

"The process of innovation is a rhythm of search and selection, exploration and synthesis, cycles of divergent thinking followed by convergence".²

Divergence, or creative synthesis, is the interlocking of previously unrelated skills, or matrices of thought. The creation of such intellectual ferment is important to innovation - the more options offered, the more likely that an out-of-the-box perspective will be available for selection. Just hearing a very different perspective challenges the mindset of others sufficiently that they will search beyond what initially appears to be an obvious solution. This is a reason that intellectually heterogeneous cross-functional teams are more innovative than homogenous functional ones.

As soon as a sufficient choice of innovative ideas has been generated, a solution - convergence upon acceptable action - needs to be defined and agreed upon. Confining the discussion here to managing the tacit dimensions of knowledge three types of tacit knowledge - overlapping specific, collective, and guiding - need to be managed.

Managing Tacit Knowledge

Managing tacit knowledge is a significant challenge in the business world - and it requires more than mere awareness of barriers.

During the new idea generation - divergent thinking - phase, people create a wealth of possible solutions to a problem. "Chaos succeeds in creating newness because it takes place in a system that is non-linear".⁴ In a well-managed development process, where a group of diverse individuals addresses a common challenge, varying perspectives foster creative abrasion, intellectual conflict between diverse viewpoints producing energy that is channeled into new ideas.¹

Mechanisms by which collective tacit knowledge is created and tapped include:

• Brainstorming - gathering together a set of experts with diverse skills, preferably including client representatives. Main rules to be followed during the idea generation phase: defer judgments; build on the ideas of others; one conversation at one time; stay focused on the topic; and think outside the box - encourage wild ideas. All ideas should be recorded and discussed during the selection - convergent thinking - phase.

• In large organizations that are conceived as a collective of communities,  separate community perspectives can be amplified by interchanges in order to increase divergent thinking. "Out of this friction of competing ideas can come the sort of improvisational sparks necessary for igniting organizational innovation".¹

Managers and innovation team leaders can use tacit knowledge to aid convergent thinking by creating guiding visions and concepts for teams involved in innovation.

Founder - Vadim Kotelnikov. © Copyright by Ten3 East-West.  | Copyright | Glossary | Links | Site Map |

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