The company’s intellectual capital is the sum of its knowledge, experience, understanding, relationships, processes, innovations, and discoveries.
Companies often make out ways to transfer both codified knowledge and tacit knowledge across the organization.
Codified knowledge is formal, systematic knowledge that can be articulated, written down, and passed on to others in documents, rules, or general instructions.
Tacit knowledge is often difficult to put into words. It is based on personal experience, rules of thumb, intuition, and judgment.
Tacit knowledge includes professional know-how and expertise, individual insight and experience, and creative solutions that are difficult to communicate and pass on to others.
As much as 80 percent of an organization’s valuable knowledge may be tacit knowledge that is not easily captured and transferred.
Thus, one hot topic in corporate IT concerns expert-locator systems that identify and catalog experts in a searchable database so people can quickly identify who has knowledge they can use.
Two approaches to knowledge management are outlined in Figure X1.
The first approach deals primarily with the collection and sharing of codified knowledge, largely through the use of sophisticated IT systems. Codified knowledge may include:
- intellectual properties such as patents and licenses;
- work processes such as policies and procedures;
- specific information on customers, markets suppliers, or competitors;
- competitive intelligence reports;
- benchmark data; and so forth.
The second approach focuses on leveraging individual expertise and know-how—tacit knowledge—by connecting people face to face or through interactive media.
Tacit knowledge includes professional know-how, individual insights and creativity, and personal experience and intuition.
With this approach, managers concentrate on developing personal networks that link people together for the sharing of tacit knowledge. The organization uses IT systems primarily for facilitating conversation and person-to-person sharing of experience, insight, and ideas.
Consider the example of ConverteamOpens in new window, a company with headquarters in the United Kingdom that maintains power generation and propulsion systems for hundreds of ships and oil exploration platforms around the world.
Employees working in China, India, Brazil, the United States, and Norway need a way to share knowledge and experience among themselves and with headquarters.
An IT system includes contact details for engineers working in various countries along with an expertise inventory. Engineers can contact one another directly regarding new products, challenges, and so forth, rather than having to go through headquarters.
Also in this series include:
- Richard L. Daft and Norman B. Macintosh, “The Nature and Use of Formal Control Systems for Management Control and Strategy Implementation,” Journal of Management 10 (1984), 43 – 66