Breaking Down Corporate Silos with Tacit Knowledge

Stephen DeAngelis

April 14, 2014

“Tacit knowledge (as opposed to formal, codified or explicit knowledge),” according to Wikipedia, “is the kind of knowledge that is difficult to transfer to another person by means of writing it down or verbalizing it. For example, stating to someone that London is in the United Kingdom is a piece of explicit knowledge that can be written down, transmitted, and understood by a recipient. However, the ability to speak a language, use algebra, or design and use complex equipment requires all sorts of knowledge that is not always known explicitly, even by expert practitioners, and which is difficult or impossible to explicitly transfer to other users. While tacit knowledge appears to be simple, it has far reaching consequences and is not widely understood.” Matt Palmquist believes that tacit knowledge, like explicit knowledge, is power. [“(Tacit) Knowledge Is Power,” strategy + business, 9 April 2014] Further, he believes that tacit power can be used to address one of the corporate world’s most persistent challenges: breaking down silos between business units. To learn more about why silos can prevent a business from achieving its full potential, read my post entitled “The Curse of Silo Thinking.”

 

The term “tacit knowledge” was first seriously discussed by Michael Polanyi (1891-1976), who wrote, “I shall reconsider human knowledge by starting from the fact that we can know more than we can tell.” [The Tacit Dimension, University of Chicago Press, 1966]. Polanyi, however, believed that tacit knowledge could be communicated if the right form of communication were discovered. He wrote:

“We know a person’s face, and can recognize it among a thousand, indeed among a million. Yet we usually cannot tell how we recognize a face we know. But the police have recently introduced a method by which we can communicate much of this knowledge. They have made a large collection of pictures showing a variety of noses, mouths, and other features. From these the witness selects the particulars of the face he knows, and the pieces can be put together to form a reasonably good likeness of the face. This may suggest that we can communicate, after all, our knowledge of a physiognomy, provided we are given adequate means for expressing ourselves. But the application of the police method does not change the fact that previous to it we did know more than we could tell at the time. Moreover, we can use the police method only by knowing how to match the features we remember with those in the collection, and we cannot tell how we do this. This very act of communication displays a knowledge that we cannot tell.”

Palmquist argues that salespeople as a group have tacit knowledge because they occupy a unique position in a business. “They have one foot in their home office and the other in their clients’ conference rooms,” he writes. “And in a business-to-consumer model, they play a vital frontline role as customers increasingly demand sophisticated or tailor-made solutions to their needs.” From this “rarefied” position, Palmquist argues, they have access to both explicit and tacit knowledge. He then asks, “How can they put this boundary-spanning knowledge to the best use?” Palmquist continues:

“To be sure, explicit data (such as sales figures or consumers’ shopping patterns) can be codified into spreadsheets or databases and therefore easily integrated into a company’s IT setup for further analysis and review. But another type of information that salespeople can glean, dubbed tacit knowledge, can’t simply be written down or quantified. It’s the look on a negotiator’s face, the ability to speak a different language, or the learned experiences gained from working with a partner. And research suggests it can potentially improve firms’ efficiency, value creation, and financial performance.”

Like Polanyi’s witness, they need to find a way to communicate knowledge they couldn’t previously describe. Frankly, some of the knowledge that Palmquist labels as tacit probably isn’t tacit at all. It’s simply not part of the formalized explicit data structure. It’s unstructured and uncaptured knowledge; but, it is data that could be written down, stored, and analyzed in a marketing visit hot wash-up, if appropriate systems were available. For example, Palmquist writes:

“Imagine salespeople who, through conversation and consultation, come to discover more about what certain C-level executives in a client’s organization want in a product or service. Armed with this tacit knowledge, the salespeople could help refine their firm’s marketing message, develop better solutions for the customer, and, in turn, increase their own company’s revenue. But in order for them to do that, management must enable the sales force to transmit such tacit information to headquarters so that the company can use it to gain a competitive advantage.”

Palmquist admits that this knowledge could be communicated if the right systems were in place; hence, it’s not really tacit it’s merely uncaptured knowledge. I’m probably splitting hairs because both tacit and uncaptured knowledge is wasted knowledge as far the organization is concerned. Capturing and analyzing this data can be powerful. Palmquist explains:

“According to a new study that investigates the influence of tacit knowledge on marketing success, hitches occur when firms lack the internal social networks to convey this information. After all, it’s second nature for salespeople to concentrate on forming social networks with customers or clients outside the company; these external bonds are closely tied to their ability to boost sales. But the advantages of forming internal social networks may be less clear to salespeople and their supervisors. The resulting missed network connections represent so-called structural holes that have been shown, in other contexts, to damage companies’ ability to obtain and disseminate knowledge throughout the organization.”

Like Palmquist, the studies to which he refers label uncaptured and unshared knowledge as tacit knowledge. The first study’s Abstract states, “If this knowledge remains solely with the boundary spanners, it cannot be used effectively to improve firm performance. This study investigates tacit knowledge exchange between sales and marketing and its ability to enhance marketing success.” In other words, the researchers aren’t arguing that the knowledge can’t be described only that it isn’t normally captured, analyzed, and shared. If the knowledge were really tacit (i.e., unexplainable), its value would be difficult to uncover. Fortunately, Palmquist is arguing that the knowledge is available and only needs to be shared to reveal its value. He continues:

“The authors of this new study examined the elements that influence tacit knowledge exchange between two departments: sales and marketing. They typically operate separately, but have much to gain from collaboration. Accordingly, researchers surveyed 200 business-to-business salespeople at various companies to explore how their success or failure in transferring their acquired tacit knowledge affected their firm’s overall marketing success. The analysis showed that accurate and comprehensive communication between the two sectors led to improved tacit knowledge flow, and that the more co-workers trusted one another, the more freely they traded tacit information. These two findings highlight the importance of encouraging recurring informal interactions between colleagues, who must necessarily undertake some risks when sharing the implicit knowledge that they alone possess. Getting salespeople and the marketing team in the same room also increased the flow of intangible information. When employees had the chance to interact on a regular basis — whether through training sessions, meetings, or daily encounters — they were more likely to form social ties that provided a platform for the exchange of non-quantifiable data. Finally, when top management emphasized the importance of knowledge sharing, employees complied.”

Occasional face-to-face meetings are valuable; but, having persistent access to information is even more valuable. That’s where a cognitive computing system that can integrate, analyze, and provide insights from unstructured data can play a significant role. The Enterra® Cognitive Reasoning Platform™ is particularly adept at integrating and analyzing unstructured data because it complements artificial intelligence with the world’s largest common sense ontology. Because it can learn as it analyzes, the CRP might actually discover true tacit knowledge as it establishes non-obvious relationships found in shared knowledge. Getting people to use and trust those insights, however, is a cultural issue that must be addressed. Palmquist believes that personal interaction is the best way to do that. He explains:

“How can companies prompt more collaboration and tacit knowledge sharing between the vital marketing and sales wings? They should focus on building a culture of trust among colleagues, encourage social ties between departments, and stress how much they value the informal ‘watercooler’ discussions that can turn an idea into action.”

Although I agree that such sales and marketing collaborations are essential, I also believe that corporate divisions outside of marketing and sales could benefit from the knowledge being shared. That’s why I recommend a system that formalizes the collection of “tacit knowledge” so that it can be integrated, analyzed, and shared more broadly throughout the organization.