Post 3 of 3:What can leaders do to embrace tacit knowledge more

My original name of this post was “What can leaders do to embrace tacit knowledge more to enable innovative organisational cultures?”, but this is too long!

This is the third post in the series. It is about some of the “how” questions that leaders should consider if they want to create more innovative organisational cultures. This is not an exhaustive list, but it covers some of the ideas tried by some of the leaders and organisations I work with.

How can leaders embrace the tacit knowledge in their teams?

Firstly, leaders must recognise the value of dissenters, namely those people who are expressing their opinions based on their different experiences and perspectives. Space must be created for those who think differently to make their contributions. In a learning organisation, different perspectives and views are valued above title and qualifications. Furthermore, people must be encouraged to express their enthusiasm or concerns without the need for “facts”. Intuitive remarks should be treated as hypotheses and leaders should encourage people to investigate these hunches so that plans and activities can be adapted to address them.

Secondly, leaders must create space for people to learn. This learning must not be limited to the core functions that people are responsible for. A learning mind set requires constant and wide-ranging learning, not only at the level of individuals but also at the level of teams. Furthermore, employees should be encouraged to read, explore and discover during work time. This means that managers must also create space for people to think individually and collectively. One way to encourage stronger social networks in organisations is to encourage people from different work areas to cooperate on solving a problem or developing an idea.

In my opinion, leaders must also ensure that their workers are balanced in how they work. For instance, workers who take loads of work home will not be able to be creative, playful or serendipitous during work time. This means that leaders must also lead by example, and not send long e-mails filled with detailed instructions after hours.

Thirdly, leaders must promote this learning culture by allowing for serendipity. This means that leaders can lead by example and allow workers to explore by themselves how things can be improved, changed or tweaked. Simple ways in which this can be encouraged are to provide teams with a small budget to try things, model things, explore ideas, jointly participate in online courses or invite a speaker to address staff. This kind of exploration cannot always be planned, but it must be encouraged within certain boundaries. Leaders must encourage teams to stretch their thinking or challenge their beliefs. This increases the stock of creative and imaginative ideas that people can generate in their daily work. While some exploration can be related to official plans, much exploration is about forming new social ties, self-expression, curiosity and even personal fulfilment.

Fourthly, great leaders can sense tacit knowledge in their people, but only if they are close enough to them. Teams and co-workers can figure out when somebody uses tacit knowledge to solve a problem or propose an idea, and can draw in people with different perspectives. Great team leaders know that tacit knowledge is an asset when people are encouraged to disagree or think out loud, when the voices of dissenters are taken seriously, and when diversity is openly embraced. Sensible leaders know when to trust their people and when to use explicit knowledge to shape the behaviour of their people.

Fifthly, the stories that people tell are important. Instead of trying to suppress gossip, leaders should listen and reflect on their own values and how these are perceived by their teams. Office gossip is a powerful form of tacit knowledge transfer, and it is not all negative. When people are talking about somebody’s misfortune, hurt or distress, leaders can step in with empathy and encourage teams to support people who are experiencing problems in their lives. This might even be an opportune moment to reflect on how organisations function within a broader societal context. Workers are extremely sensitive to the gap between what managers say they value and how they behave. When people talk about office relations, or breaches in values by any rank, leaders should step in and make sure that rules and regulations are adhered to, regardless of the seniority of the people involved. These are the moments where real organisational values are refined.

When co-workers start to influence each other negatively, leaders should step in and separate people or re-arrange them to break up negative cells. All of this is only possible when leaders listen to what their people are talking about, and then being trustworthy and responsible in dealing with what they hear.

Lastly, leaders should take care not to over-formalise. Formal rules often communicate mistrust and reduce the ability of people to exercise judgement. When everything is fixed in a rule, regulation or process, organisations’ ability to respond to sudden change is reduced.

Perhaps leaders can ask their teams “Is there something we must do less of to be more innovative?”. This question often targets excessive rules, policies and guidelines. I always encourage the leaders I work with to openly state when they have to make a decision for which a precedent or rule does not exist. We then encourage their teams to generate well-thought-out portfolios of options, or a portfolio of small experiments that can be tried. These portfolios must leverage the formal and informal capabilities of the organisation and individuals. This is one way that tacit knowledge becomes more explicit. One benefit is that by building the adaptive capability of their teams by not always taking the lead, their workers are encouraged to come up with ideas, solutions or options. When people understand that they have a role to play in formulating options, they are also better able to reflect on why some things works and others do not. This makes the organisation more agile, as people learn to work together to solve novel problems, and they become better at detecting when things are not going according to plan. Because they are co-designers, they are also better able to generate and evaluate alternatives, which means that the organisation has a greater stock of options that it can combine and execute. If too much formality is enforced this ability will not emerge.

In my view many leadership teams are too focused on explicit knowledge, and that tacit knowledge deserves more attention. For organisations to innovate now and in the future, the development of tacit knowledge formation must be encouraged and embraced. This means that opportunities must be created for people to self-organise around ideas, projects and topics. This builds trust, even if it does not always add directly to the bottom line. It also makes it easier for the finance people to team up with the technical people, and for people to get better at drawing on the experiences and perspectives of others.

Post 2 of 3:Why explicit knowledge dominates organisational cultures

In the previous post, I argued that tacit knowledge gets absorbed into the environment of the organisation (and society), but only if the right conditions prevail. It is futile to ask people to record their experiences or report on lessons learnt. Tacit knowledge is highly contextual, and it is nearly impossible to describe all the factors that an individual has to consider in an instant when deciding on a course of action.  Obstacles to identifying or sharing tacit knowledge include, for example, language (not knowing the appropriate words or not being able to explain something adequately), lack of self-confidence, fear of being ridiculed and a multitude of other factors.

Even when leadership is willing to listen to the concerns, ideas and anecdotal explanations of employees, many errors occur in this absorption process. Errors are caused both by the difficulty of the sender to explain or share what works and why, and because the recipient, in other words the broader organisation, might not be able to absorb this knowledge due to technical difficulty, the inability to appreciate the value of what is communicated, or often the inability to understand the relevance of the knowledge being shared. In South Africa this absorption process is often exacerbated by race, gender, hierarchy and various social factors.

Leadership of organisations, in pursuit of different kinds of innovation, must purposefully set out to create a learning environment. This does not mean that people only learn in the context of official projects, but that everyone is given the opportunity to experience the self-fulfilment of exploring ideas, trying new combinations, engaging with others, working together to improve productivity, and playing together to increase creativity. Practically this means that leadership must allow people to learn about topics where the value of the learning is not immediately clear to the organisation. Leaders must understand that people who are frequently learning new concepts, even if these are unrelated to their core functions, are better able to connect the disconnected, to reframe problems as solutions, and are more willing to embark on a process of discovery with uncertain outcomes.

When the innovation strategy of the organisation is too narrowly focused on project plans, milestones, etc., tacit knowledge usually suffers. Those who are more senior or more articulate crowd out the voices of people who may have great insight but no safe way of expressing their thoughts. The result is that although a successful product or process may have been completed, employees do not feel self-fulfilled or that they have learned anything of value. They may even feel neglected or isolated. This often happens when organisations strive to become leaner. Then all the connectors and generalists are replaced with specialists who have a direct contribution to make in key processes. This may result in organisations losing their agility to respond to changes in their context.

Due to the formality of the planning process, codified knowledge is valued above instinct; accuracy of information and planning metrics are more important than the views of people who express doubt, but who cannot explain why something does not seem right. The practice of learning, reflecting, arguing, rough prototyping and then adapting the process is often neglected, or allowed only in brainstorming sessions that are vulnerable to manipulation or group thinking. It takes sensitive leaders to recognise that some experienced people are holding back their thoughts, or that somebody from a different background could perhaps share a valuable insight or alternative perspective. Individuals may feel that their ideas are not valued, or perhaps because they struggle to express what is in their minds articulate people lose patience and just disregard the less articulate people. Or perhaps people with great ideas are simply worried that because time and resources are finite, they may derail the process or decelerate the momentum or change the direction of a certain train of thought.

Post 1 of 3: Organisational knowledge and innovation: the difference between tacit and explicit knowledge

Knowledge in organisations can either be explicit or tacit, or a mixture of the two. Let us first try and sort out the difference between explicit knowledge and tacit knowledge.

Explicit knowledge is easier to identify and is typically captured in processes, systems, routines, documents, guidelines and so on. Some explicit knowledge from outside the organisation can also shape the internal environment, such as regulations, standards, professional codes and broadly accepted practices. Explicit knowledge flows in society, over organisational borders through channels like the media, the education system, professional bodies, accepted good practices, conferences, manuals, trade journals or the appointment of new staff, and so on.

Tacit knowledge is much harder to detect, capture and disseminate. It spreads slower, both because of the difficulties of detecting and transmitting it, as well as the challenges of absorbing it and figuring out how to use it. Most people are not fully aware of the value or perhaps even the existence of this kind of knowledge. What you do and why you do it in a particular way is shaped not only by the task at hand, but by your experience, your own values, your education and the current environment. Often when you ask a person how they knew what to do in a unique situation, they merely shrug and say “it felt right”. Tacit knowledge is often hard to explain and even harder to document or capture.

We gain, absorb, leverage and integrate these two kinds of knowledge in rather different ways. For leaders this distinction is important, as it provides clues on how knowledge that enables adaptation, improvement and innovation can be created or harnessed.

We pick up explicit knowledge from our environment, even if this process is imperfect and prone to all kinds of errors. For instance, we may misinterpret rules, overlook a regulation, or use the wrong form. With the dramatically increased amount of information that is now available in many organisations, we find that people often simply don’t know which explicit or codified knowledge to use. This applies to individuals, organisations and in some cases even industries. We can simply become overwhelmed by contradictory information, even if it is well articulated or explained in detail. The fact that it is sometimes very difficult to know which explicit knowledge to use gives rise to the use of brokers and gatekeepers, which could be a good thing or a bad thing. For instance, when rules are not clear, or are inconsistent, individuals might use their insight into the workings of the system to their advantage in return for favours.

But here is the rub. Tacit knowledge, as far as I can tell, starts mainly within individuals, and then spreads to teams. If we draw an arrow representing knowledge flow, we see that the arrow moves from the individual to the organisation, that is if the organisation is aware of the existence and of this knowledge and is attentive to its value. Many organisations are managed in such a way that tacit knowledge is suppressed, even if this is unintentional. Tacit knowledge is personal, although some of it may be shared with some close co-workers or trusted people. Tacit knowledge mostly spreads through personal exchange, trust, close observation or working closely with colleagues. For instance, one way in which tacit knowledge spreads is by mimicry, where you copy how other people behave or carry out a task. When people are able to express their insight into tacit knowledge, they do so conditionally, depending on their assessment of the intent and trustworthiness of the person asking for advice.

Many organisations have no way to determine the value of the tacit knowledge of their employees, and often the value of an employee’s contribution is only realised when they leave. It is these people who are sorely missed when they leave. Neither is it as simple as merely asking people to write down what they know – we’ll discuss this in more detail in the next post.

New series: Organisational knowledge and innovation

In the next few posts I will elaborate on the role of knowledge in enabling learning organisations. In a previous post (here), I have concentrated mainly on how knowledge for innovation is generated in organisations. The response from readers was very positive, and as I worked with management teams to strengthen their innovative culture I realised that there are some further concepts that I must elaborate on. It is not only about what workers do, it is also about the environment created by leaders.

The first post in this series will look at the difference between tacit and explicit knowledge, and how both are formed. The second post explores why explicit knowledge dominates organisations. The third post will discuss how leaders can embrace tacit knowledge and encourage their teams to create new knowledge together.

“By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.” 
― Confucius

Unlocking knowledge in organisations

A favorite topic that I love to talk, think and write about is the knowledge that is lurking around in organisations, often untapped.

Last week, the University of Stellenbosch Business School, where I am a member of faculty in the Executive Development programme, published an article I wrote in its thought leader newsletter. It is titled “Unlocking knowledge in organisations to enable innovation”. What started off as a 1200 word article was reduced to 700 words by Linton Davies, the wordsmith that always helps me to better express my ideas when I write formal publications. I think this article as it stands now must be the most I have ever said in only 700 words!

I am really proud of this article in its current short form. It started off many years ago as a much a more complicated module in my innovation systems training session. Now it is a practical workshop format that I use often in organisations supporting innovation, but increasingly in businesses, government programmes and even NGOs.

It is informed by evolutionary and complexity thinking, and is thus in line with my current research and the principles that I now pursue and value. Of course, a lot of extremely important theory is left out in this form, but by helping managers become more aware of how the inhibit or promote knowledge generation in their organisations is for me already a great start.

 

Instigating Innovation: Tech push fallacy is still alive

Let me continue with the Instigating Innovation series. I will slowly shift my attention to the technology intermediaries, research centres and technology transfer organisations that exist in many countries to overcome persistent market failures in the private sector. Yes, I know it is a shock for some, but these centres do not really exist to promote the technical careers or the of these people in these centres, nor to promote a specific technology in itself. From a systemic perspective, these kinds of technological institutions exist because they are supposed to overcome pervasive causes of under investment in technology (and skills development) and patterns of poor performance of enterprises. Economists describe the last two phenomena as the result of market failures, mainly caused by information asymmetries, a lack of public goods, high coordination costs, economies of scale and a myriad of other challenges faced by enterprises (hierarchies), markets and networks.

The challenge is that very often the technology these intermediaries promote become an objective in itself. The technology, embodied in equipment, processes and codified knowledge, becomes the main focus. So now we see technology centres being created to promote Industry 4.0, or 3D printing, or environmentally friendly technology. While I am the first to admit that I am helping many of my clients come to grips with industry 4.0, additive manufacturing or environmentally friendly technology, we must not confuse means with ends.

About 20 years ago, my late business partner Jorg Meyer-Stamer and his colleagues at the German Development Institute developed the Systemic Competitiveness framework. Many of my posts on technological capability and innovation systems are based on this Systemic Competitiveness, but I wont go into this right now (perhaps I can do that in a later post), but will only state this this model has greatly influenced my thinking of how technological capability can be developed in order to upgrade, improve or stimulate the competitiveness and innovative behavior of enterprises and state institutions. In one of my current research contracts I had to retrace the evolutionary economics origins of this framework and I found the following paragraph in one of the early publications:

“A further fallacy also played a role in the past: the establishment of technology institutions was based on the technology-push model, according to which breakthroughs in basic research provide impulses to
applied research, which these in turn pass on to product development. In fact, however, research and development is for the most part an interactive process; and it is frequently not scientific breakthroughs
that impel technological progress, but, on the contrary, technological breakthroughs that induce scientific research, which then seeks to interpret the essence and foundations of a technology already in use.”

What struck me was the past tense in the first sentence. So many of the technology institutions I am working with are still established on these same grounds. A technology push model. Actually, much of economic development has the same mindset, a solution-push model. It implies that clever solutions are developed in a clinical and carefully managed environment, and then is made relevant to business people (as Jorg often said “stupid business people”) through iterations of “simplification” and “adaptation”. Don’t get me wrong. I am the first to promote scientific discovery. But this has its place. Modernisation of industry must start from the demand side:

  • where is the system now?
  • What is preventing companies from competing regionally and internationally?
  • What kind of failures, both in business models but also in markets are repeating over and over again?
  • What kind of positive externality can we create?
  • How can we reduce the costs for many enterprises to innovate and become more competitive?

Only then do you start asking what kind of technological solutions, combinations, coordination effort or demonstration is needed. Perhaps no new equipment or applied research is needed, maybe something else must first happen. Some non technical things that I have seen work are:

  • mobilising a group of enterprises into a discovery process of common constraints and issues
  • arranging exchange between researchers, academics and business people at management and operational levels
  • hosting interesting events that provides technical or strategic inspiration to the private sector
  • helping companies overcome coordination costs
  • making existing technology that is not widely used available to industry so that they can try it
  • placing interns at enterprises that have different skills than the enterprise use at the moment
  • arranging visits to successful enterprises; and many more.

The truth of the matter is that the innovative culture of the technology institution, and its openness to learn from the industries it is working with are much better predictors of whether the industries around them will be innovative. If the technology institutions are bureaucratic, stale or rigid, nobody in industry will be inspired by them to try new ideas, new technologies, explore applying technology into new markets, etc. Just like we can sense when we arrive (or contact) a succesful enterprise, so we can all sense when we have arrived at an innovative technology institution. It looks different, there is a vibe. It is information rich, everywhere you look you can see ideas being played with, things being tried, carcasses of past experiments can be seen in the corner.

I can already hear some of my customers leading technology centres reminding me that I must consider their “funding mandate from government” and their “institutional context in universities” as creating limitations in how creative they can be, and just how much demand orientation they can risk taking. Yes. I know this. In the end, leaders must also create some space between the expectations of their funders (masters?), their teams and their target industries. In fact, how leaders balance these demands and what is needed by their clients, students and staff can probably be described as business model innovation. If you cannot get funding from government for what you believe is required, just how creative are you to raise this funding through other (legal) means?

We have seen over and over again that it is not the shiny new piece of equipment in the technology centre that inspires industry; but the culture of the technology centre, the vibe, the willingness to try crazy ideas to make even old stuff work better or combining old and new. Ok, I agree, the shiny equipment excites geeks like me, but this is not all that matters.

My main point is this. Technology Institutions should focus on understanding the patterns of performance or under-performance in the industries and technology domains they are working in, and should then devise innovative products, services and business models to respond to these. This means working back from the constraint to what is possible, often through technology. To be effective in helping entrepreneurs overcome the issues they are facing would require that these technology institutions are innovative to the core. Not just using innovative technology, or offering some innovative services, but also in how these institutions are managed, how they discover what is needed and in how the collaborate with other institutions and the private sector.

To instigate innovation in the private sector, publicly funded technology institutions need to be innovative themselves.

 

Source:

ESSER, K., HILLEBRAND, W., MESSNER, D. & MEYER-STAMER, J. 1995.  Systemic competitiveness. New patterns for industrial development. London: Frank Cas. Page 69

 

 

Instigating Innovation: Accelerating Experimentation in industry

When innovation centers, technology transfer centers, applied research platforms and other similar organisations want to help industry with innovation, one way could be to assist companies to experiment with new ideas. I will simply refer to these centers from here onward as innovation and technology support centers. In most of the places where I work these centers are often hosted by or associated with universities, applied research organisations or with technology transfer organisations.

One way to support industry to experiment is through various technology demonstration-like activities, allowing enterprises access to scarce and sophisticated equipment where they can try new ideas. In its simplest form, facilities allow companies to order samples to a certain specification, allowing a company to see whether a particular process can meet a specification or performance criteria. A slightly more intensive form of tech demonstration allows in visitors and a technology and its application is demonstrated (eyes only, no touching!). Very often equipment suppliers play this role, but in many developing countries equipment suppliers behave more like agents and can not really demonstrate equipment.

In Germany I saw demonstration facilities where the pro’s showed the enterprises how things works, and then they stood back allowing teams from a company to try things themselves.

A critical role of innovation support centers is to provide industry with comparative studies of different process equipment. For instance, in an innovation center supporting metal based manufacturers, providing industry with a comparison of the costs and uses of different kinds of CAD systems could be extremely valuable to industry.

Maker labs, Fablabs and similar centers all make it easier for teams that want to create or tinker with an idea to gain access to diverse technologies, reducing the costs of experimenting. However, the range of equipment in these labs are often not so advanced, but it can often be very diversified. In my experience these centers are very helpful to refine early idea formation and prototyping. However, to help manufacturers experiment with different process technologies, different kinds of materials, substitute technologies, etc. is the a binding constraint in many developing countries. The costs of gaining new knowledge is high, and due to high costs of failure, companies do not experiment.

Innovation support centers must be very intentional about reducing the costs of various kinds of experiments if they want manufacturers, emergent enterprises and inventors to try new ideas. These innovation centers can play a role by:

a) assisting companies to internally organize themselves better for experimentation internally

b) assisting many companies to organize themselves better for experimentation collaboratively

c) conducting transparent experiments on behalf of industry collectives

In my experience, graduates from science disciplines often understand how to conduct experiments because their coursework often involve time in a lab. They know basics like isolating variables, managing samples, measuring results, etc. However, engineering graduates often do not have this experience (at least in the countries where I am working most). For many engineering graduates, the closest they will ever get to an experiment is a CAD design, or perhaps a 3D printed prototype.

Therefore, it is necessary for a range of these innovation and technology support centres to assist companies at various hierarchical levels to experiment.

At the functional or operational level, organising for experimentation involves:

  • creating teams from different operational backgrounds,
  • creating multiple teams working on the same problem,
  • getting different teams to pursue different approaches
  • failing in parallel and then comparing results regularly
  • failing faster by using iterations, physical prototypes and mock ups
  • According to Thomke, results should be anticipated and exploited – even before the results are confirmed

At a higher management level, organising for experimentation involves:

  • Changing measurement systems to not only reward success, but to encourage trying new things (thus encouraging learning and not discouraging failure).
  • moving from expert opinion to allow naivety and creativity
  • Preparing for ideas and results that may point to management failures or inefficiencies elsewhere in the firm (e.g. improving a process may be hampered by a company policy from the finance department)

Getting multiple companies and supporting organisations to experiment together is of course a little bit harder. Management of different organisations have many reasons to hide failures, thus undermining collective learning. One way around this could be to use a panel or collective of companies to identify a range of experiments, and then these experiments are conducted at the supporting institution in a transparent way. All the results (success, failures and variable results) are carefully documented and shared with the companies. However, to get the manufacturers to use these new ideas may require some incentives. In my experience, this works much better in a competitive environment, where companies are under pressure to use new ideas to gain an advantage. In industries with poor dynamism and low competition, new ideas are often not leveraged because it simply takes too much effort to be different.

Promising ideas from experiments can be combined and integrated after several iterations to create working prototypes. Here the challenge is to help industries to think small. First get the prototype process to work at a small scale and at lower cost before going to large scale of testing several variables simultanously. An important heuristic is to prototype at as small as possible scale while keeping the key mechanical or scientific properties consistent. More about this in a later post. (Or perhaps some of the people I have helped recently would not mind sharing their experience in the comments?)

I know this is already a long post, but I will add that Dave Snowden promotes Safe2fail probes, where teams are forced to design a range of experiments going in a range of directions even if failure is certain in some instances. In my experience this really works well. It breaks the linear thinking that often dominates the technical and manufacturing industries by acknowledging that while there may be preferred solutions, alternatives and especially naive experiments should be included in the overall portfolio. To make this work it is really important that the teams report back regularly on their learning and results, and that all the teams together decide which solutions worked best within the context.

THOMKE, S.H. 2003.  Experimentation Matters: Unlocking the Potential of New Technologies for Innovation. Harvard Business Press.

 

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