Innovation, the source of sustained advantage for most companies, depends upon the individual and collertive expertise of employees. Some of this expertise is captured and codified in software, hardware, and processes. Yet tacit knowledge also underlies many competitive capabilities—a fact driven home to some companies in the wake of aggressive downsizing, when undervalued knowledge walked out the door.
The marvelous capacity of the human mind to make sense of a lifetime's collection of experience and to connect patterns from the past to the present and future is, by its very nature, hard to capture. However, it is essential to the innovation process. The management of tacit knowledge is relatively unexplored— particularly when compared to the work on explicit knowledge. Moreover, while individual creativity is important, exciting, and even crucial to business, the creativity of groups is equally important. The creation of today's complex systems of products and services requires the merging of knowledge from diverse national, disciplinary, and personal skill-based perspeaives. Innovation— whether it be revealed in new products and services, new processes, or new organizational forms—is rarely an individual undertaking. Creative cooperation is critical.
We wish to thank Walter Swap. Barbara Feinberg, and three anonymous reviewers for their helpful comn'ients and the Harvard Business School Division of Research for supporting this work. 12 CAUFORNIA MANAGEMENT REVIEW VOL40,NO,3 SPRING 1998
The Role of Tadt Knowledge in Group innovation
What isTacit Knowledge?
In the business context, we define knowledge as information that is relevant, actionable, and based at least partially on experience. Knowledge is a stibset of information; it is subjective; ii is linked to tneaningful behavior; and it has tacit elements born of experience. Business theorists have, for the sake of convenience, contrasted tacit knowledge with explicit knowledge as if they were distinct categories. J.C. Spender defines tacit knowledge as "not yet explicated."' Ikujiro Nonaka and Hirotaka Takeuchi use this distinction to explain how an interaction between the two categories forms a knowledge spiral: explicit knowledge is shared through a combination process and becomes tadt through internalization; tacit knowledge is shared through a socialization process and becomes explicit through externalization.
In this article, we build on Michael Polanyi's original, messier assumption: that all knowledge has tadt dimensions.^ Knowledge exists on a spectrum. At one extreme it is almost completely tacit, that is, semiconscious and unconsdous knowledge held in peoples' heads and bodies. At the other end of the spectrum, knowledge is almost completely explicit, or codified, structured, and accessible to people other than the individuals originating it. Most knowledge, of course, exists in between the extremes. Explicit elements are objective, rational, and created in the "then and there" while the tacit elements are subjective, experiential, and created in the "here and now."
Although Spender notes that "tadt does not mean knowledge that cannot be codified,"'' some dimensions of knowledge are unlikely ever to be wholly explicated, whether embedded in cognition or in physical abilities. Semiconsdous or unconscious tacit knowledge produces insight, intuition, and decisions based on "gut feel." For example, the coordination and motor skills to run a large crane are largely tacit, as are the negotiation skills required in a corporate meeting or the artistic vision embodied in the design of a new computer program interface. The common element in such knowing is the inability of the knower to totally articulate all that he or she knows. Tacit knowing that is embodied in physical skills resides in the body's muscles, nerves, and reflexes and is learned through practice, i.e., through trial and error. Tacit knowing embodied in cognitive skills is likewise learned...
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