Tacit Knowledge as a Source of Competitive Advantage

Tacit knowledge underlies many competitive capabilities. The experience, stored as as tacit knowledge, often reaches consciousness in the form of insights, intuitions, and flashes of inspiration.

The marvelous capacity of your mind to make sense of your previous collection of experiences and to connect patterns from the past to the present and future is essential to the innovation process. "The creativity necessary for innovation derives not only from obvious and visible expertise, but from invisible reservoirs of experience."

Tacit knowledge, or implicit knowledge, as opposite to explicit knowledge, is far less tangible and is deeply embedded into an organization's operating practices. It is often called 'organizational culture'.

"Tacit knowledge includes relationships, norms, values, and standard operating procedures. Because tacit knowledge is much harder to detail, copy, and distribute, it can be a sustainable source of competitive advantage... What increasingly differentiates success and failure is how well you locate, leverage, and blend available explicit knowledge with internally generated tacit knowledge."

Inaccessible from explicit expositions, tacit knowledge is protected from competitors unless key individuals are hired away.

by Vadim Kotelnikov and Ten3 East-West

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