In Summary

Analysis for The Australian by Dr Sean Gallagher, Director of the Centre for the New Workforce, Swinburne University of Technology.

In a corner of a factory shed at UAP, an art and design firm in Brisbane, a designer wearing a virtual reality headset gracefully moves his hands in 3-D space, effort­lessly sculpting a complex architectural balustrade.

He is exploring how VR technology can improve the in-house design process. His every design movement is simultaneously projected on to a screen so others can observe.

Initial ­results on performance improvement using VR for design have been promising, leading UAP to look at how to incorporate VR more widely.

Swinburne University of Technology is preparing to train apprentices and construction design students in drone use. Having observed drones in action overseas, the goal is to use drones to scan 3-D digital images of existing structures to be used in computer-aided ­design programs, as well as simplifying building inspections without leaving the ground. Through experimenting with the technology, students will gain ­insights into how drones can ­help improve the building ­process.

In 2015, Netherlands-based ING Bank embarked on a transformative shift from a traditional bureaucratic organisation to an “agile” model.

Inspired by tech companies such as Google, Netflix and Spotify, ING had to make agile meaningful to itself. ING’s first step, according to chief operating officer Bart Schlatmann in a McKinsey Quarterly ­interview, was for the board to spend two months “painting the vision” of a new “nervous system” for the bank.

Discovering insights by exploring new technologies and methodologies through modifying existing practices is “tacit” learning in action. Introduced by Michael Polanyi in 1966, he ­described tacit knowledge as “we know more than we can tell”.

According to John Hagel and John Seely Brown in a Harvard Business Review article last year, “in a rapidly changing world, much of the new knowledge comes in the form of tacit knowledge”. And it is even more important in the exponential era with rapidly accelerating technologies. Why? Tacit approaches can create new value for companies faster.

Let’s take a closer look at the two dimensions of knowledge — tacit and explicit — how they create value through different mechanisms and how tacit can convert into explicit.

The best source of a company’s sustained competitive advantage is knowledge. The “explicit” form of knowledge is easily articulated, codified, verified and able to be shared. Explicit knowledge is the essential ingredient to building new products, creating new ser­vices and developing new apps and devices. It is what universities and research and development laboratories produce using rigorous methodologies. It accumulates in textbooks. And it is what we study at college or take in a massive open online course.

In contrast, the UAP, Swinburne and ING examples illustrate a different mechanism to creating knowledge — through tacit approaches.

Ikujiro Nonaka helped popularise tacit knowledge in a 1991 HBR article. He described how the Matsushita Electric Company’s efforts to invent a bread-making machine had failed repeatedly ­because prototypes could not knead the dough correctly, resulting in uneven cooking. The company even tried comparing X-rays of machine-kneaded dough with the dough made by professional bakers, without success.

It was only when Matsushita’s lead software developer spent time ­observing and interacting with an expert bread­maker — tacit learning — that she gained the tacit knowledge of how to knead ­correctly. She then was able to ­articulate the right product ­specifications.

The dough-kneading case study illustrates the mechanism for creating new explicit knowledge from existing explicit knowledge can sometimes be compar­atively slow — and potentially costly — especially where the problem cannot be well defined.

In general, companies cannot ­afford investing precious time and resources in trials, proof of concepts, pilots and prototypes, changing one variable at a time to investigate a hunch.

But Nonaka also showed how creating tacit knowledge first could be a fast and effective pathway to creating explicit knowledge. It starts with “tapping the tacit and highly subjective insights” of individuals and clearly articulating them.

Once “externalised”, as this step is called, those insights can then be tested in developing ­explicit knowledge.

This tacit to explicit conversion is how ING and UAP have extracted value.

Through subjective explor­ation of agile approaches, the ING board quickly gained valuable insights as to how agile could work for their company. Several pilot squads were then set up to learn and refine the insights. And in less than nine months from the initial concept, the bank’s ­entire headquarters had implemented agile.

The UAP designer is creating new tacit knowledge into VR-based design. With his insights captured, UAP now is testing proto­types to create valuable explicit knowledge.

Exploring, experimenting and playing are some of the core skills tacit learners employ to gain valuable insights in new environments. How can universities, steeped in the traditions of creating and teaching explicit knowledge, best prepare students in the exponential era of constant change?

Hagel and Brown say “the most valuable form of learning is actually creating new knowledge”, and in a rapidly changing world this increasingly will be through tacit approaches.

Universities have always been safe spaces for students to take ­intellectual risks using explicit knowledge. These institutions should now also consider how to create opportunities where students can experiment with new technologies, like apprentices and construction design students using drones, to create new knowledge through tacit approaches.

Tasked with this knowledge objective, students develop underlying capabilities of being tacit learners, such as curiosity, critical thinking, risk-taking competence, imagination and creativity. Social and emotional intelli­gence is likewise developed as tacit insights are externalised.

As Nonaka reminds us: “New knowledge always begins with the individual.”

In the exponential era, the companies with ­employees who can create new knowledge the fastest will have the edge. The graduate who is both a competent expert and skilled tacit learner will be highly sought after.


Written by Dr Sean Gallagher, Director of the Centre for the New Workforce at Swinburne University of Technology. Originally published by The Australian.