Corporate renewal programs usually address tangible elements such as the organizational structure, processes and infrastructure, as well as the explicit knowledge of workers through training or coaching. Such programs do not usually address the tacit knowledge of workers. Tacit knowledge, the personal and specialized professional knowledge that individual workers develop to succeed in performing complex roles, is often a significant corporate resource. It can have a positive utility in helping workers adapt quickly to the renewed organization. However, it can also act as a strong constraint to change. This article discusses tacit knowledge within the context of organizational renewal programs, and suggests some practical techniques for positively influencing its utility.

1. Introduction

The corporate response to significant economic or competitive pressure is often a program of internal renewal, designed to refresh core competencies, reduce operating cost and increase effectiveness and competitiveness of the core business. Tangible elements such as the organizational structure, processes and infrastructure, such as IT systems, can be explicitly updated. The explicit knowledge of workers, such as their fluency in operating procedures, can also be tackled through training or coaching, and related artifacts such as manuals or workplace instructions can relatively easily be updated. However, management literature does not satisfactorily discuss how the tacit knowledge of workers should be addressed as part of corporate renewal. 

Tacit knowledge, the personal and specialized professional knowledge that an individual worker needs to succeed in performing a complex role, is a significant corporate resource, particularly in innovation-intensive and professional services firms. As corporate renewal usually implements changes to roles and work procedures, the inherent richness and adaptability of tacit knowledge may help workers quickly to acclimatize to the renewed organization and flex their work approach accordingly. However, while being a corporate asset, tacit knowledge can sometimes act as a strong constraint to change both at an individual and group level. For example, cognitive congruence, where individuals within a group will over time converge to a common tacit knowledge domain which then naturally resists change, is often a contributory factor to corporate underperformance. While explicit knowledge can be updated visibly and unambiguously, the process of changing tacit knowledge, and especially the mental models that workers base their behavior and attitudes on, is more complex and much less predictable, visible and controllable. 

This article highlights the need for management literature to address this issue and strive towards developing a coherent strategy for controllably managing tacit knowledge shifts during corporate renewal, and in the meantime it suggests some practical techniques, such as storytelling, for positively influencing its utility.

2. The epistemological problem of taxonomizing knowledge

Knowledge is “the most strategically-significant resource of the firm” (Grant, 1996a), has substantial financial value (Brooking, 1997), and has a key role in developing a sustainable competitive advantage (Nonaka, 1994; Stańczyk-Hugiet, 2007, p.28). Unfortunately management literature generally struggles with the very concept of knowledge at the epistemological level. It is largely biased towards a neo-functionalist, taxonomic view of knowledge characterized by the framing of phenomena in terms of dualisms and an assumption that there is a natural tendency to social order and equilibrium (Schultze & Stabell, 2004). While some constructivist scholars consider knowledge in terms of dualities (e.g. Tsoukas, 1996), located in action (Cohen, 1998) and the continuously shaping world of becoming (Kogut & Zander, 1996; Styhre, 2004), even in constructivist discourse there is a regular tendency to deconstruct and taxonomize knowledge. 

That epistemological caveat aside, at the individual level, while hard to define with much precision (Badenoch et al, 1994), much academic organizational literature explicitly or implicitly views knowledge in terms of a continuum between explicit knowledge (Polanyi’s (1967) ‘knowing what’), which can be codified and expressed, is easily communicable and sharable, “is reusable in a consistent and repeatable manner” (Snowden, 1999), is non-specific and can be shared (Ambrosini & Bowman, 2001); and tacit knowledge (Nonaka, 1994), which is deeply personal, non-sharable, embedded in culture and shaped by beliefs and metaphors (Polanyi’s (1967) ‘knowing how’). Winter (1987) proposes the characteristic of tacitness itself as an intrinsic variable of knowledge, inversely correlated to its capacity to be codified and abstracted. As Michael Polanyi suggested back in 1962, tacit knowledge is often characterized by knowing things, without being able to explain how, “the kind of knowledge people possess but that they are unable articulate” (Schultze, 2000). 

This much referenced explicit-tacit classification has been employed extensively in management literature to elaborate additional knowledge dichotomies such as local-universal, codified-uncodified, canonical-noncanonical and procedural-declarative (Orlikowski, 2002). Several scholars decompose tacit knowledge further into discrete cognitive (i.e. established mental models) and technical (i.e. acquired task know-how) elements (Johnson-Laird, 1983; Nonaka & Takeuchi, 1995; Baumard, 1999). However, as I have remarked earlier, such classifications tend to reflect a strong taxonomic bias (Tsoukas, 1996) and a lack of confidence in literature to meaningfully challenge some the underlying propositions (Styhre, 2004). Some contributors appear to classify knowledge in deliberately simplistic terms in order to be able in more concise ways promote various strategies and techniques of managing it (e.g. Winter, 1987; Nonaka & Takeuchi, 1995; Hansen, 1999). 

Many scholars also still refuse clearly to acknowledge the essentially inseparable nature of knowledge where tacit and explicit knowledge are mutually constituted (Tsoukas, 1996) and need to be holistically addressed (Boland & Tenkasi, 1995; Davenport & Prusak, 1998). In practical terms, as illustrated by an action research vignette later in this article, this suggests that during corporate renewal corporations should explicitly address the tacit and not just the explicit dimension of workers’ knowledge. This tacit knowledge forms the mental framework which allows workers to organize and interpret the explicit knowledge conveyed to them, such as work procedures, and the two dimensions synthesize into professional intellect (Quinn et al, 1996). 

Workplace observations, as illustrated by the vignette, support this mutually constituted view of professional knowledge, it being neither fully explicit nor fully tacit, but a dynamic interplay of the two. Awareness of normative expectations, such as how to behave in a specific customer interaction, is characteristically based on a blend of explicit knowledge (e.g. corporate guidelines and scripts) and tacit knowledge (e.g. judgment derived from previous personal interactions with customers). Pfeffer & Veiga’s (1999) research, for example, demonstrates that in observing or questioning workers, it is impossible in practice to differentiate between their tacit and explicit knowledge components. Even with the full commitment of participants, it would be conceptually impossible for workers to accurately explain their mental processes or the elemental sources of their knowledge. As Brown & Duguid (2000a) observe, “there is a gap between what people think they do, and what they really do. Actual work practices are full of tacit improvisations that the employees who carry them out would have trouble articulating”. Direct observation is also inherently difficult, not least because mental processes themselves are not visible, only the resultant action or outcomes. 

3. Renewing the knowledge of workers

In order for a corporate renewal program to embed successfully, and for workers to effectively align with it, workers’ knowledge needs to be addressed holistically and take into account its mutually constituted nature. Management literature provides little clear normative advice of how this should be tackled, and no coherent strategy for shifting and realigning workers’ professional knowledge to the new corporate operating model. Classic schemas that attempt to show knowledge holistically as an interplay between tacit and explicit (e.g. Nonaka & Takeuchi, 1995) typically invoke processes such as socialization (from tacit to tacit), externalization (from tacit to explicit), internalization (from explicit to tacit) and combination (from explicit to explicit). However, these schemas do not adequately address the practical and conceptual issues with attempting to shift workers’ tacit knowledge. These include knowledge stickiness which constrains its transmission (Szulanski, 1996), the inability of the human mind to fully and accurately remember retained information (Stein & Ridderstråle, 2001), inherent impossibility to fully articulate tacit knowledge (Schultze, 2000; Brown & Duguid, 2000a), limited absorptive capacity of actors (Cohen & Levinthal, 1990), the situated and context-specific nature of knowledge (Glazer, 1998; Wenger, 1998), and that at the core of any sensemaking are the necessarily polluting processes of reduction and extrapolation (Reed, 1988). 

Fundamentally, though, classical schemas of knowledge dynamics do not address the sociocognitive view that “individuals are not just passive perceivers of their environment” (Stein & Ridderstråle, 2001), but actively construct their own meaning from information being received (Weick, 1979; Glazer, 1998), and this in turn depends on the sender, the receiver, and the social context. Because of different cognitive and heuristic biases (Sanchez, 2001), sensemaking by two individuals even when sharing exactly the same experience will produce differences in their resultant knowledge (Walsh, 1988; Crossan et al, 1999). 

Corporate training programs can clearly convey explicit knowledge. This could include new work instructions, procedures, scripts, product specifications, business rules, indeed anything that can be articulated and codified. Workers could even be tested afterwards to demonstrate their accurate retention of this knowledge. As the discussion above illustrates however, the process of individual sensemaking moderates both the accurate conveyance of tacit knowledge and the ability to unambiguously test it. 

It is not helpful that in management literature, both academic and popular, the treatment of learning and knowledge sharing is often inhibited by its implication that the issue is predominantly that of communicating information. However, information and knowledge are not synonymous (Davenport & Prusak, 1998; Hendriks, 1999; Sanchez, 2001). The former is a neutral collection of data (Glazer, 1998), whereas the latter is “the condition of knowing or understanding something” (Webb, 1998), and the capacity to exercise judgment and draw distinctions (Tsoukas & Vladimirou, 2001). Information becomes knowledge only when it is absorbed and interpreted by one’s mindframe, which in turn it enriches. Information is thus merely the potential for knowledge. As the vignette presented in this article illustrates, it is only through training and management techniques that address the tacit knowledge of workers, and not just convey explicit information, is it possible to help them develop the required capacity for judgment and other professional soft skills.

The confused interchangeability of the terms knowledge and information leads many theoretical contributors into the pitfall of also treating knowledge management as essentially an information technology issue (McDermott, 1999; Akgun et al, 2003), where “much of the literature of ‘knowledge management’ is almost identical in theme and content to that of ‘information management’” (Blosch, 2001), and “approximately 70 per cent of publications on knowledge management so far have been written by information technology specialists who focus on the technical aspects such as database design and knowledge warehousing” (Easterby-Smith et al, 2000). Instead, knowledge should fundamentally be considered a dimension of the “social ecology of an organization” (Gupta & Govindarajan, 2000), the dynamic interaction of the company culture, structure, processes, infrastructure, and people. 

Most observers from the social constructionist school emphasize the key role of such social context and situational determinants (DeFillippi & Ornstein, 2003) in the processes of knowledge creation and sharing (e.g. Wenger, 1998; Brown & Duguid, 2000b), underlining that “these transformations in knowledge (between tacit/explicit and personal/organizational) happen through the social interactions in which individuals communicate, share activities, and exchange ideas” (Merali, 2001), and that “we acquire knowledge by participating in a community” (McDermott, 1999). This supports the notion that training or coaching sessions with workers which aim mainly to transfer tacit knowledge need to have a strong interpersonal interaction element within a supportive social context. Techniques such as group discussions, role playing, storytelling and even many of the traditional corporate ‘team building’ exercises are consequently all natural and effective channels for influencing tacit knowledge.

Paul Hendriks (1999) observes that “in a strict sense, knowledge cannot be shared. Knowledge is not like a commodity that can be passed around freely, it is tied to a knowing subject. To learn something from someone else, i.e. to share his or her knowledge, an act of reconstruction is needed”. To share any knowledge, the knowledge giver must first externalize it. This can be done through one or several methods such as direct mentoring, explicit codification, observable action, metaphors or storytelling. The knowledge receiver then needs to internalize this knowledge (Davenport & Prusak, 1998). This involves the integration of the newly acquired knowledge with that already absorbed, and potentially resolving any conflicts and ambiguities between these two sets. These processes, as well as the actual act of transferring the knowledge between giver and receiver, inevitably modify (‘pollute’) the unit of knowledge being shared. Thus, I would agree with Hendriks (1999) that in reality we do not share knowledge, in the sense that a unit of knowledge cannot be passed to another person in an unmodified form, but rather allow the receiver to take an imperfect and personalized impression of the giver’s knowledge.

4. Tacit knowledge in corporate renewal

In many modern organizations, key workers perform knowledge intensive roles and have a relatively broad locus of discretion. Such workers are often team leaders, product designers, engineers, or experts in marketing or research & development. They perform roles that are typically unpredictable in process and/or with an unpredictable outcome (Earl, 1994; Szulanski, 1996; Amar, 2002, p.66; Morawski, 2009, p.40) and are often under full control and autonomy of the actor (Drucker, 1999). It is critical in times of corporate renewal for the organization not only to carry them across successfully to the new operating model, but to engage with them effectively so that they become supporters and ideally champions of this renewal. 

Corporations that rely on a largely dictatorial approach to such workers during corporate renewal programs are likely to fail. Literature generally agrees that the nature of such knowledge intensive work intrinsically conflicts with a hierarchical and coercive approach to management. “Knowledge organizations require skills derived from freethinking and unbounded actions of those working for them” (Amar, 2002, p.3), or as Joseph Weiss (1996) similarly observes, “the information-based organization has knowledge workers who are specialists (or players) and who resist command-and-control procedures based on the military model”. Davenport et al (1996) agree: “knowledge workers are likely to resist standard routines; in fact, the level of discretion and autonomy often separates knowledge workers from administrative workers”. “Each doer has a unique way of accomplishing knowledge work” and requires control over the environment within which this work is situated (Amar, 2002, p.66).

According to Alvesson & Sveningsson (2003), “managers must allow much space for knowledge workers, partly because managers know less of what goes on than those large groups of employees holding esoteric expertise, partly because professional norms and occupational cultures make such employees less inclined to subordinate themselves to managerial hierarchies”, which resonates with the widespread notion that workers in knowledge intensive roles need to be largely autonomous and self-managing (Drucker, 1999; Morawski, 2009, p.95), and Blosch’s (2001) summary that “the knowledge-based organization focuses on allowing individuals to learn, experiment and communicate with each other in an atmosphere that is open to change”. 

This can prove to be a great asset in corporate renewal, as such workers can quickly self-adapt to the new operating model without much interference from management. Providing the objectives and priorities of corporate renewal are communicated clearly and meaningfully to the workers, they can flex their roles accordingly. Where the need for management interference is accepted, because of the uniqueness of each knowledge worker and their work content, the management approach would need similarly to be unique and appropriate to that individual (Amar, 2002, p.7).

What have not been well articulated in management literature are strategies for effectively engaging with such workers and motivating them to be supporters and champions of change through directly influencing their tacit knowledge where this is required. Where literature cites knowledge management as a component of corporate renewal, as already discussed this is usually from an information management perspective. There is also a lack of specific operational examples of any management of tacit knowledge, and extant literature on this issue remains essentially conceptual (Ambrosini & Bowman, 2001). 

While being a corporate asset, tacit knowledge can be a strong constraint to change (Ambrosini & Bowman, 2001; Brown & Duguid, 2001)) and limit competitive flexibility and responsiveness. “Knowledge results from, and reinforces, specific mindsets” (Chakravarthy et al, 2003). While explicit knowledge, such as company guidelines or product specifications, can be updated visibly and unambiguously during corporate renewal, the process of changing tacit knowledge, and especially the mental models that workers base their behavior and attitudes on, is more complex and much less predictable, visible and controllable. Sanchez (2001) similarly discusses the concept of cognitive congruence, where individuals within a group will over time converge to a common tacit knowledge domain of “beliefs, self-concepts and scripts”, which then naturally resists change and can lead to cognitive stasis in work groups. 

It is sometimes incorrectly assumed that highly knowledge-intensive corporations (such as research or professional services organizations) are inherently more adaptable and hence more manageable candidates for corporate renewal than traditional process-based ones (such as manufacturers). This notion is indirectly supported by an implicit assumption in most management literature that knowledge is something self-evidently positive, in that the more knowledge workers possess, the ‘better’. This view is difficult to justify on two counts. Firstly, and philosophically, it can be asserted that knowledge “is not necessarily functional, useful, and a generally good thing” (Alvesson & Kärreman, 2001). As any other resource, its utility is directly proportional to its contribution within a domain of action (Tsoukas & Vladimirou, 2001; Vera & Crossan, 2003; Stańczyk-Hugiet, 2007, p.45). In other words, workers’ knowledge is only ‘positive’ if it helps them successfully to perform their roles in line with the needs of the organization (Stańczyk-Hugiet, 2007, p.96) or, in this context, to successfully adapt during corporate renewal. Secondly, there are specific examples where workers “correctly learn that which is incorrect” (Huber, 1991), and their subsequent superficially ‘positive’ knowledge was actually damaging to their effectiveness and performance. This includes the continuation of poor improvisations based on sub-optimal heuristic knowledge. 

A corporate renewal program needs therefore to ensure that not only is there a structured approach for aligning workers’ tacit knowledge with the demands of the new operating model, but that any specific elements of this knowledge that are either barriers to change or would negatively impact the effectiveness of the new model are eliminated.

5. Supporting renewal through metaphors and storytelling

Knowledge and language form an indissoluble fusion in that “knowledge is constructed in and through language” (Johnson & Duberley, 2000) and knowledge is predominantly transmitted linguistically through speaking or writing. The granularity of detail the language and its fidelity to the concepts being transmitted has a significant effect on the quality of the knowledge transaction. As Tsoukas & Vladimirou (2001) argue, “when our language is crude and unsophisticated, so are our distinctions and the consequent judgments. The more refined our language, the finer our distinctions”. Literal language, especially written manuals or instructions, has an inherently reductive propensity (Tsoukas, 1991). To transmit abstract knowledge, such as complex ideas and experience with greater effectiveness, techniques such as the use of metaphors and storytelling are often employed in the workplace (Martin et al, 1983; Tsoukas, 1991; Crossan et al, 1999; Gibson & Zellmer-Bruhn, 2001). Vivid and emotionally engaging stories in the workplace can convey what would otherwise be difficult to enunciate (Ambrosini & Bowman, 2001), such as heuristic (Tsoukas & Vladimirou, 2001) and normative information. These also have the added benefit of naturally situating the knowledge transaction within a supportive social context as discussed earlier.

Storytelling is thus a significant element of both organizational socialization and knowledge transfer, and has been discussed as a discrete phenomenon in literature (Brown & Duguid, 2000a). Stories and anecdotes are particularly important to workers in tacit knowledge intensive (and therefore ambiguous) contexts as a method of continuously challenging and reinforcing perceptions of sequentiality (“X happened, which triggered Y”) and causality (“Y happened because I did X”) of actions in a complex working environment. While individual incidents may not be replicable or even directly relevant to other workers, over time, storytelling builds up patterns and cognitive models that help workers better navigate the “bounded rationality” (Cyert & March, 1963) of their work environment. 

An important issue related to storytelling is the likely retention or memory of a specific message. “Because stories are more vivid, engaging, entertaining, and easily related to personal experience than rules or directives” (Swap et al, 2001), this creates the danger of stories outliving their currency or value. Often the organizational environment changes and stories that are no longer applicable to the new environment still persist. Such workplace stories need to be ideally replaced by ones more appropriate to the new organization. Empirical data also suggests that there is also a bias towards negative stories (Swap et al, 2001). This resonates with my earlier assertion that knowledge is not always self-evidently positive. A working environment rich in tacit, metaphor and story based knowledge transactions could actually be inherently counterproductive to individuals within it, and constrain corporate renewal.

A strong catalyst for corporate renewal is the establishment of new metaphors and workplace stories that replace previous ones and reinforce the culture and expected norms and behavior of the new operating model. If the corporate renewal program involves training and coaching workers, in addition to conveying explicit knowledge such as new work procedures, management should consider mechanisms of establishing appropriate storytelling that would help to clarify and reinforce new methods of working. Such storytelling should also engage workers emotionally and positively motivate them. The following action research vignette illustrates an example of a structured approach to tackling the tacit knowledge of workers during corporate renewal, and includes a strong element of storytelling.

6. Vignette: A major UK insurance company

I was recently engaged in a significant restructuring of the customer services organization of a major British insurance company. I was directly responsible for several corporate renewal strands, including:

• the re-engineering of key business processes and business rules 

• radical organizational restructuring (including establishing new customer response teams)

• migration to telephone-based service (including establishing a call center front office) 

• changes to skills and IT/telephony infrastructure to enable telephone-based service

• introduction of workflow-based customer order management system and procedures, and

• fundamental cultural change (case management, customer focus, empowerment, etc.)

This was supported by an intensive training program of all the staff, which was designed to instill the required skills, both hard (e.g. how to operate the new IT and telephony systems) and soft (e.g. how to deal with angry customers). This training was delivered by an external company as a multi-media package over several weeks.

Before the whole customer services organization was trained and migrated to the new operating model, I established a small pilot unit of 30 workers taking live customer calls as per the new operating model. Despite intensive training, it became clear that certain negative elements of the old culture that we wanted to replace, such as some specific behaviors, persisted. This became even more apparent at times of stress, when for example there were long call queues. While the workers mostly adhered to the new work instructions and scripts which they learned during training (explicit knowledge), the optional and improvised elements of their work (tacit knowledge) suffered in quality and often reflected the norms of the old organization. 

An example was the recording of customer case notes. In the old operating model communication with customers was primarily in writing, so customer service caseworkers only added marginal notes to the correspondence already in the customer file, and customer interaction was therefore mostly self-evidencing. In the new telephone-based operating model, caseworkers were required not only to annotate key facts from the conversation with the customer, but also use their judgment to decide what other information to record in free format that may be useful in future interactions with the customer or in proposing other products or services to them. A specific ‘wrap-up time’ period was incorporated into the customer service process to facilitate this. However, the quality of these notes was very poor and workers struggled to decide what to record from the sometimes long conversations with customers. Similarly, when faced with customer requests or behavior that had not been directly covered in the formal training program, some caseworkers found it difficult to cope with the task. Even seemingly trivial departures from the ‘normal’ customer interactions covered in training, such as a call from a customer who had a poor command of English, could be a problem for many caseworkers.

As every customer interaction was unique, it would have been impossible to cover every eventuality in training or by instructions or scripts. Instead, we faced the challenge of instilling in the case workers the confidence and judgment that they needed to perform their new roles effectively, for example how to decide what information to record and how to behave when faced with an unusual customer situation.

We tackled this tacit knowledge domain with three techniques: 

I. Role playing

We had earlier established a standalone training environment that simulated a call center. Once a week, we then scheduled a short training exercise in which a professional trainer would call a number of workers chosen at random, while the rest of the work group listened in on this. The trainer played the role of a customer and would deliberately choose to be ‘difficult’ or unpredictable. The group afterwards discussed how well the worker coped with the case, what could have been done differently, and what should have been recorded in the case notes. 

II. Listening in

Similarly, we decided that during this initial period, each caseworker would spend ten percent of their work time listening in on others’ calls. This was intended as a mechanism both to share best practice and improve soft skills. The two workers had some time allocated at the end of the listening in period to discuss significant calls, and to compare notes that they both made. 

III. Storytelling 

We also allocated some time at the end of each shift for a group discussion. The team leader was coached in facilitating an exchange of stories and workers were encouraged to describe any particularly interesting, peculiar or indeed difficult customer interactions that they had during the day. Subsequent (and often humorous) discussion not only helped to equip the team to better handle a similar interaction in the future, but also fostered a strong team spirit. It is worth noting that some of these stories have survived as popular workplace anecdotes to this day, and are still often retold to new workers as part of their induction.

The combination of these three techniques proved very successful at changing the attitudes and behaviors of the workers, and improved their soft skills. The caseworkers significantly modified their tacit knowledge to better align it with the demands of the new organization. Also, such tacit knowledge-intensive intragroup interactions helped establish a common best practice, an identifiable team culture and group congruence, and helped to embed the social context to facilitate effective exchange of ideas and experiences in the future. Following this pilot exercise, this approach was incorporated into the training program for the whole customer services organization, and a further program of continuous improvement post corporate renewal.

7. Conclusion

In order to equip workers with the soft skills that they will need to adapt successfully to a new operating model and to ensure that existing knowledge is not itself a barrier to change, corporations should consider techniques that directly influence the tacit knowledge of workers. Typical training programs do not address this, and management literature has not so far presented a coherent strategy. However, proven practical techniques such as storytelling and role playing, which communicate richly heuristic and otherwise not easily articulable information, can be employed as very useful enablers of corporate renewal. 

Copyright © 2020 by Piotr Ney. All rights reserved.

No part of this work may be published, reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author.

[The full table of references is available on request]