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Tacit knowledge: an advantage or a stumbling block for change?

Changes and innovations are necessary for the survival of any company. But how does a company know which changes and innovations are needed? In order to discover opportunities, the company must be able to acquire knowledge from outside the organization, absorb it, adapt it to the organization and then incorporate it in the day-to-day operations. This knowledge can arise, for example, from the information provided by the management control system (including the key performance indicators (KPIs)). However, there may also be knowledge present in the organization that cannot be measured. We call this type of knowledge tacit knowledge.

Tacit knowledge is a subjective form of knowledge that only manifests itself when performing specific tasks. Consider, for example, a process within an organization that has no manual, but for which the employee knows exactly how the process works. Tacit knowledge disappears when the employee leaves the organization and takes this knowledge with them.

How does this tacit knowledge affect the ability to process knowledge from outside the organization? On the one hand, we find that when there is a lot of tacit knowledge in the organization, this is negative for the absorption and adaptation of external knowledge. In this situation, the employees already have a lot of knowledge about how the tasks in the company should be performed. This creates a barrier for looking for a new way of working based on outside knowledge. They rather stick to their own habits.

On the other hand, a large amount of tacit knowledge ensures that the information resulting from the KPIs can be better applied in the organization. The tacit knowledge filters out the most important information from the available data. Moreover, this makes both problem solving and decision making more efficient. Among other things, the employees are better able to use company-related knowledge in assessing the future of the company.

Thus, tacit knowledge has an indirect influence on a company's strategic changes and innovations. On the one hand, a large amount of tacit knowledge limits the absorption of knowledge from outside the organization, while this external knowledge is necessary for finding new opportunities. On the other hand, however, tacit knowledge does ensure that information coming from KPIs can be better applied in the organization. This makes it easier to discover opportunities. Therefore, managers must realize that this paradox is present in their organization and respond to it. It is important that they encourage the employees to seek and propose new opportunities, even if these opportunities pose a threat to their current way of working. It are just these employees who are most suitable to select the interesting opportunities. In addition, the managers must also use objective ways to collect information. The results show that tacit knowledge alone is insufficient to stimulate innovation and strategic change. Formal and explicit information and knowledge (for example from KPIs of the performance measurement system) should also be available to stimulate the potential positive effects of tacit knowledge.


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