With tacit knowledge, people are not often aware of the knowledge they possess or how it can be valuable to others. Tacit knowledge is considered more valuable because it provides context for people, places, ideas, and experiences. Effective transfer of tacit knowledge generally requires extensive personal contact and trust.
Tacit knowledge is not easily shared. One of Polanyi's famous aphorisms is: "We know more than we can tell." Tacit knowledge consists often of habits and culture that we do not recognize in ourselves. In the field of knowledge management the concept of tacit knowledge refers to a knowledge which is only known by an individual and that is difficult to communicate to the rest of an organization. Knowledge that is easy to communicate is called explicit knowledge. The process of transforming tacit knowledge into explicit knowledge is known as codification or articulation.
Tacit knowledge has been found to be a crucial input to the innovation process. A society’s ability to innovate depends on its level of tacit knowledge of how to innovate. Polanyi suggested that scientific inquiry could not be reduced to facts, and that the search for new and novel research problems requires tacit knowledge about how to approach an unknown. Further writers have suggested that most laboratory practices, practices that are vital to the successful reproduction of a scientific experiment, are tacit (Collins, 2001). Ikujiro Nonaka and Hirotaka Takeuchi's book The Knowledge Creating Company (1995) brought the concept of tacit knowledge into the realm of corporate innovation. In it, they suggest that Japanese companies are more innovative because they are able to successfully collectivize individual tacit knowledge to the firm. The two researchers give the example of the first Japanese bread maker, whose development was impossible until the engineers interned themselves to one of Japan's leading bakers. During their internship, they were able to learn the tacit movements required to knead dough, and then transfer this knowledge back to the company.
An example of the problems of tacit knowledge is the Bessemer process--Bessemer sold a patent to his advanced steel making process and was sued by the purchasers who could not get it to work–-in the end Bessemer set up his own steel company, which became one of the largest in the world and changed the face of steel making.
Tacit knowledge may seem a simple idea but its implications are large and far reaching. If important knowledge is tacit, then it cannot be effectively spread through an organization. This means that useful knowledge will not be able to reach those who need it without direct, face-to-face contact. It also means that training newcomers in an organization becomes more time consuming, because they must be given time to learn on their own while doing, which reduces overall efficiency. In order to collectivize and spread tacit knowledge, organizations must invest greatly in the human capital of their members.
Technical specialists acquire a defined body of formal knowledge during their education, but to be effective they must acquire tacit knowledge and this is done through a sort of apprenticeship. So a civil engineer has to first have a degree, and then several years of experience before he or she can become chartered. The civil engineer is then deemed to be an effective practitioner.
By and large, this works well, but, in a significant number of cases, it does not. As an example, the proliferation of irrigation-scheme-induced bilharzia and schistosomiasis, waterborne parasites carried by a certain species of snail, can be attributed to the failure of civil engineers to implement cheap anti-bilharzia measures. This failure was due to their lack of tacit knowledge and what is known as the relevance paradox. The civil engineers believed that the only relevant knowledge needed to complete [the project] was of the structural capacities of concrete, maximum water-flow and pressure, etc. They did not realize that in order to control the spread of the parasites, they would need also to prevent the snails (which carried the disease) from multiplying.
The whole notion of explicit knowledge as something that could be captured in an information system is at odds with this interplay between subsidiary and focal awareness, just as the mainstream definition of tacit knowledge as something unknowable or belonging to the subconscious. The tacit can be known but only in terms of the Gestalt that it bears on. The explicit is gone in the next moment, when a new Gestalt is formed in the focal awareness. Polanyi described this interplay between subsidiary and focal awareness as indwelling. We indwell our interpretative frameworks so that we order and select our impressions. We indwell our integrative skills so that we focus on what we want to achieve and our bodily skills implement what is needed. The focus is a Gestalt that is produced from the subsidiary particles, just as it is something that summons bodily skills.
The implications of this paradigm of indwelling (Sanders, 1998), have hardly been touched upon. Brohm (2005) explains this process of indwelling in terms of a stage metaphor. On the stage there is a focus in the play, an event in the theatre play (i.e. focal awareness), pointed at by the spotlight. Around the light circle on the stage there are actors, attributes (i.e. impressions). It is the director that has arranged the parts in such a way that the whole emerged from its parts (i.e. integrative skills).
The main benefit of this stage metaphor is that it counters the popular metaphor of the iceberg (the subconscious/tacit under water, the explicit above water). The metaphor shows the dynamics and interdependence between explicit and tacit knowledge.
The implications of such a reading of Polanyi are manifold. Firstly, true discovery comes from an intention to be submerged in the phenomena under study, thereby emphasizing participatory observations as a method. Secondly, there is no knowledge transfer, but it is possible to indwell the actions from a master in order to gradually reconstruct skills. Thirdly, knowledge and ethics are inherently connected. There is no neutral knowledge. Any claim to knowledge reflects a particular standpoint, interpretative framework etc., as there is no explicit knowledge that is simply given. Fourthly, since we all have a personal history, a particular education and socialization there can be quite different perspectives. But the problems in organizations or societies can be so complex that different perspectives are relevant. In such a case organizing should be an emergent process to allow for differences and even make use of that. Such a constellation Polanyi named polycentric order.
Bao, Y.; Zhao, S. (2004), "MICRO Contracting for Tacit Knowledge - A Study of Contractual Arrangements in International Technology Transfer", in Problems and Perspectives of Management, 2, 279- 303.
Brohm, R. Bringing Polanyi onto the theatre stage: a study on Polanyi applied to Knowledge Management, in: Proceedings of the ISMICK Conference, Erasmus University, Rotterdam, The Netherlands, 1999, pp. 57-69.
Brohm, R. "Polycentric Order in Organizations", published dissertation by ERIM, Erasmus University Rotterdam: Rotterdam, 2005. http://hdl.handle.net/1765/6911
Collins, H.M. "Tacit Knowledge, Trust and the Q of Sapphire" Social Studies of Science' p. 71-85 31(1) 2001
Nonaka, I and Takeuchi, H. The Knowledge Creating Company Oxford University Press, 1995
Patriotta, G. (2004). Studying organizational knowledge. Knowledge Management Research and Practice, 2(1).
Sanders, A. F. (1988). Michael Polanyi's post critical epistemology, a reconstruction of some aspects of 'tacit knowing'''. Amsterdam: Rodopi.
Tsoukas, H. (2003) ‘Do we really understand tacit knowledge?’ in The Blackwell handbook of organizational learning and knowledge management. Easterby-Smith and Lyles (eds), 411-427. Cambridge, MA: Blackwell Publishing .