Dr Jouko Huju of GMBA Finland talks about the importance of retrieving tacit knowledge in the marine industry.
The average age of people involved in the marine business is rapidly growing. A great number of experienced people in all positions in the industry will retire over the next ten years. By failing to recover the tacit knowledge residing in the minds of these people and tacit knowledge in general, the companies and the industry as a whole will lose an important competitive advantage. Based on the interviews and discussions with key people in the industry it has become clear that even the notion of tacit knowledge is widely unknown. It is of crucial importance to find out how tacit knowledge could be recovered and used in the organisation’s strategic planning. The 12 members of the Global Marine Business Advisors have 319 years of accrued knowledge from the marine industry.
As this paper wishes to establish a link between strategic decision making and the position of knowledge, especially tacit knowledge, within them, it is important to talk about the meaning of strategy. Strategic planning calls for action in three key areas: The first is managing a company’s business as an investment portfolio. The second involves assessing each business’s strength by considering the market’s growth rate and the company’s position and suitability in that market. The third is establishing a strategy. In every branch of business, a company must develop a game plan for achieving its long-term objectives. The main role of strategy is to chart the course of an organisation in order for it to sail cohesively through its environment. Strategy is needed to reduce ambiguity and provide order. In this sense, a strategy is like a theory: a cognitive structure to simplify and explain the world, and thereby facilitate action.
Strategy relates to action plans, methodologies, tactics and steps that are employed to reach a company’s vision and goals. It would not be wise to start questioning what strategy actually means. No matter which of the definitions one uses, the aims are the same. In most definitions of strategy there is a clear claim of an action plan for reaching the planned goals. Strategy was originally borrowed from the military and adapted for commercial use over time. Strategy is defined as a joint effort of all who are responsible. The conclusion must be that those responsible for the creation of strategy must ask themselves the right questions, especially in terms of the right assumptions for the present situation, and set the goals for growth and profitability. The science of business strategy is not able to deal with questions of value and belief, and has precluded the possibility of the creation of knowledge or vision from its theoretical domain. This is very important to note when the importance of knowledge in strategic planning is discussed. Planned knowledge recovery in its various forms has so far not been an essential of the marine industry’ strategic planning. Or has it?
Before narrowing this review down to the actual issue of tacit knowledge one must understand what knowledge in general is all about. Knowledge is the source of the highest-quality power and the key to the power shift that lies ahead. One can easily claim, that the future belongs to people endowed with knowledge.
In my own language, Finnish, the difference between the notions of information and knowledge is very thin. The word “tieto” is used for both. It is therefore important to note that knowledge, unlike information, is about beliefs and commitment and that knowledge, unlike information, is about action, but, like information, it is about meaning. Knowledge may be tangible or intangible by nature. Expertise, when incorporated into an organisation’s database and operating technologies, is tangible. Similarly, explicit knowledge is tangible because it has been encoded into documents, databases, or some other permanent medium.
Knowledge as a Competitive Advantage
After having reviewed strategy and knowledge itself, it is then important to take a closer look at why knowledge can be a competitive advantage for any company or organisation. To become a basis for a sustainable competitive advantage, knowledge must be readily spread within the firm that has it, but not readily spread to other firms. Knowledge which cannot be spread within a firm remains the property of a few people, rather than that of the firm, and will have a limited impact on the firm’s ability to create value. On the other hand, knowledge that can be spread within a company can generally also spread across its boundaries to other firms, thereby becoming industry’s best practice, rather than the basis for a sustainable competitive advantage.
To escape the paradox, and for knowledge to provide a sustainable competitive advantage, the skills and resources that underlie a firm’s core competencies must be relatively widely transferable within the firm, but very difficult for other firms to copy or develop. The economic and producing power of a modern corporation lies more in its intellectual power and service capabilities than its hard assets.
There are claims that Japanese companies have been much more successful in using tacit knowledge than western companies. It all boils down to the conversion of tacit knowledge to explicit knowledge. The notion of tacit knowledge was first introduced by Polanyi (1958). To Polanyi, knowledge could be separated into explicit and tacit knowledge. Tacit knowledge is what escapes representations and measurement but still matters when specific operations and activities are undertaken. The aim of a skilful performance is achieved by the observance of a set of rules which are not known as such to the person following them.
Perhaps the most important step toward harnessing the tacit knowledge of individuals and teams is to allow it to flow from the pull of emotional commitment and deep personal involvement. Therefore, the challenge for managers is to inspire, guide, excite, encourage, and shape, without imposing arbitrary structures that might destroy the fragile essence that separates breakthrough innovation from uninspired incrementalism. Although tacit knowledge constitutes a major part of what we know, it is difficult for organisations to fully benefit from this valuable asset. This is so because tacit knowledge is inherently elusive, and in order to capture, store, and disseminate it, it is argued that it first has to be made explicit. However, such a process is difficult and often fails due to three reasons:
1) We are not necessarily aware of our tacit knowledge
2) On a personal level, we do not need to make it explicit in order to use it
3) We may not want to give up a valuable competitive advantage
We must also address difficulties in sharing the tacit knowledge linked with perception and language. The subconscious nature of tacit knowledge and the difficulty of expressing it are commonly found as the main barriers to its diffusion. It is not only that we have difficulties expressing and articulating what we know, we may not even be conscious of what we know or how the tacit knowledge connects to our explicit knowledge.
In the knowledge-based view and knowledge management discourse, knowledge is, inter alia, divided into two forms; explicit, representable; and tacit, unrepresentable, personal knowledge. Knowledge is thus depicted as being two-fold: knowledge that we can express and knowledge that is outside of such capability. As a consequence, the tacit component of knowledge appears as a residual category, while at the same time being somewhat mystifying. Something that is tacit, is something that we really cannot control, something that is slippery and external to our established regime of representation. We can claim that the separation between tacit and explicit knowledge is a false problem because it simply does not rest on an elaborated ontological and epistemological discussion that satisfactorily clarifies the assumptions underlying such a division. We cannot tell for sure where explicit knowledge ends and where tacit knowledge begins, because that is based upon the individual’s ability to express and formulate him or herself. Tacit and explicit knowledge are not discrete categories, but always coexist in one another; all explicit knowledge presupposes some tacit skills, and tacit knowledge is always based on the use of explicit knowledge.
Tacit knowledge recovery
The conversion of tacit to explicit knowledge (externalisation) involves forming a shared mental model, then articulating through dialog. Collaboration systems and other groupware (for example, specialised brainstorming applications) can support this kind of interaction to some extent. In their four modes of knowledge conversion, externalisation holds the key to knowledge creation, because it creates new, explicit concepts from tacit knowledge. Perhaps the most important step toward harnessing the tacit knowledge of individuals and teams is to allow it to flow from the pull of emotional commitment and deep personal involvement. If that is so, the challenge for managers is to inspire, guide, excite, encourage, and shape, without imposing arbitrary structures that might destroy the fragile essence that separates breakthrough innovation from uninspired incrementalism. The dynamic model of knowledge creation is anchored to a critical assumption that human knowledge is created and expanded through social interaction between tacit knowledge and explicit knowledge.
“Tacit knowledge can only be used when it firstly is found”
Knowledge transfer seems to be most successful when the atmosphere is right. The success of tacit knowledge transfer is very often apparently a matter of attitude. It seems that in the marine industry there are only a few scattered attempts to recover it.
Creating this atmosphere is primarily the responsibility of the management but also practically of all workers. The challenge is to get people to open their “treasure chest of knowledge”. In many cases people nearing retirement age quite eagerly share their knowledge when they realise that what they have to offer is greatly valued. What will happen if nothing is done to start systematic recovery of tacit knowledge? A great amount of knowledge will disappear when the large, present generation of workers retires in a few years from now. The disappearing knowledge is of utmost importance to the companies and surprisingly few realise this. By not retrieving this knowledge the companies will inevitably lose one competitive advantage. In many cases this particular advantage is much bigger than the companies seem to understand.
It is also a natural phenomenon that people want to retain information or alternatively they are not placed in a situation where this knowledge could be made explicit. Personal knowledge is an essential tool of power. People taking their knowledge with them when they leave the company or, in this case more often their position of trust as a member of the board, is a major problem. Tacit knowledge recovery should not take place only when people are retiring but also when people change positions within the company or when temporary replacements are needed. It is important to keep in mind that by listening to experiences, we could perhaps learn to do things better. It will be hard to transfer all experiences but one can learn by listening.
Very often the biggest obstacle to the transfer of tacit knowledge is simply lack of time. To be able to effectively transfer tacit knowledge one needs to converse, follow and observe. Transferring tacit knowledge and experiences should be part of every company’s everyday life and not a special project.
Therefore the key to a successful way of using it within an organisation is to find the right people to solve any given problem. Experts from different fields become starting points for the transfer of tacit knowledge.
Ways to retrieve tacit knowledge
Group brainstorming can be very effective as it uses the experience and creativity of all members of the group. When individual members reach their limit on an idea, another member’s creativity and experience can take the idea to the next stage. Therefore, group brainstorming tends to develop ideas in more depth than individual brainstorming. Brainstorming in a group can be risky for individuals. Valuable but strange suggestions may appear stupid at first sight. Because of such, you need to chair sessions tightly so that uncreative people do not crush these ideas and leave group members feeling humiliated.
If group brainstorming is to be used on a continuous basis as a tool for tacit knowledge recovery, it is very important to plan the session well in advance. It is important to find the right people and place them in proper conditions not only in terms of the subject but also in terms of venue, mood, and time.
A facilitator, preferably a person from outside the industry, chairing the sessions will inevitably improve the outcome. Based on these considerations there is no doubt that group efforts in the form of brainstorming will be a very effective way to recover tacit knowledge.
When planning this activity for the future it is necessary to ensure that group members in a session are mainly from the same area of business, that they are properly briefed about the aims of the session, that they will be given enough time for discussion and reflection, that the session will take place in relaxed surroundings and that ideas, comments and conclusions will be properly documented. It is important to consider a brainstorming session also with people who are already retired. The retired generation would be able to make a great contribution. Using brainstorming would be the first suggested choice for tacit knowledge recovery.
Tacit knowledge refers to experience and skills gained by individuals during their working lives. Therefore talking to such individuals in person would be an excellent means of capturing and retrieving this knowledge. The interviews would involve asking them to talk about what they have done in a special situation where they have used their own personal skills. These interviews would need to be well prepared in advance. The preparation would include a draft of topics and a carefully composed list of questions. To be able to get the best results these interviews would probably need a third person to take notes or, alternatively, the discussion ought to be recorded. Although interviews would be very efficient and productive and would certainly bring the desired results they would be very time consuming and thus also expensive. The managers in the marine companies should prepare a set of questions concerning desired topics and use them spontaneously whenever an appropriate situation arises. Additionally, one ought to explore the possibility of involving some of the already retired experts and others who have moved to another industry. Cross-using their expertise would produce additional knowledge. In short, interviews would complement brainstorming.
Using Existing Technology
Modern technology enables people to share tacit knowledge directly. Technology could be used for sharing. On-line discussion groups, apps, platforms etc. are definitely a potential tool in capturing tacit knowledge. Some companies mainly involved in the marine service, repair and docking business, have started using e.g. Facebook. In their daily business these companies face many situations where nobody seems to know the correct way to carry out a certain job or repair process. It seems evident that people have learned to express themselves and that quite a few problems have been solved there. This is a very cost-effective method of tacit knowledge recovery.
The findings clearly show a need to implement systems for tacit knowledge recovery. In the marine industry this knowledge is very scattered among the companies. There is enough evidence to suggest that the notion that tacit knowledge itself is very unfamiliar. This leads to the conclusion that the time has come to include this dimension as a part of marine industry’s strategic planning. I have suggested putting the emphasis on using brainstorming techniques as the main source but simultaneously conducting a series of interviews and encouraging companies to use the opportunity offered by social media and other platforms.
Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA