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Article.indd 1 Dr. Milan Frankl, MBA, PhD Abstract: In this article, I describe an exploratory

Article.indd

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Dr. Milan Frankl, MBA, PhD Abstract: In this article, I describe an exploratory study on
Dr. Milan Frankl, MBA, PhD
Abstract: In this article, I describe an exploratory study
on Tacit Knowledge Transfer in Business, a problem of
interest to most executives in small and medium busi-
nesses (SMBs).
Although currently Knowledge Management is a sub-
ject of research in big corporations, its investigation in
the particular environment of SMBs is limited. Because
succession planning is essential for the survival of those
types of companies, finding ways of transferring tacit
knowledge can be a major benefit to them.
I propose definitions of Explicit and Tacit Knowledge
and review some of the existing literature in that area.
I conducted a survey with three control groups and
explored its results.
I hypothesize that executives in SMBs indeed apply tacit
knowledge in their decision-making process using heuris-
tics and that those heuristics could serve as the basis for
some form of Tacit Knowledge Transfer. Preliminary results
of the study have confirmed the proposed hypotheses.

Categories and Subject Descriptors

[Management]: Management techniques, knowledge management, heuristics.

General Terms: Management, tacit knowledge, explicit knowledge, heuristics, knowledge transfer.

Keywords: Tacit knowledge transfer, heuristics, rules of thumb

IntroductIon

With more than 35 years of management practice in big, medium, and small companies, 20 years of which in po- sitions of senior or executive management, my intent was to rely on personal experience to explore means of

Tacit Knowledge Transfer in Small and Medium Businesses using Heuristics

Transfer in Small and Medium Businesses using Heuristics Dr. Frankl, MBA, PhD, is a professor of

Dr. Frankl, MBA, PhD, is a professor of business with University Canada West’s School of Business, and an adjunct professor of bioinformatics at the University of Victoria. He has managed large-scale systems development projects, conducted numerous IT, telecommunications, and business re- engineering strategic plans, and played major roles in key business systems development initiatives. He has considerable experience in strategic management planning, project management, system development, system metrics and evaluation techniques, system feasibility studies, system quality assurance, and human resource planning. Dr. Frankl is involved in promoting Information Technology at the University level (as an academic) as well as at the industry level (as a research associate) in the areas of systems development techniques and knowledge transfer. He published extensively on information technology management, science, and education technology topics.

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on information technology management, science, and education technology topics. Expert Insights 11 10/02/17 5:29 PM

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Tacit Knowledge Transfer in Small and Medium Businesses using Heuristics

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providing tools and techniques to senior management of small and medium busi- nesses (SMBs) that would enhance their decision-making process through tacit knowledge transfer (TKT). Since the 1970s, researchers have been ex- ploring new constructs in search of measures to supplement existing cognitive ability tests as predictors of real-world performance. Among the most promising constructs of business success predictors is practical in- telligence or common sense, sometimes re- ferred to as “tacit knowledge.” [1] Measures of practical intelligence predict real-world criteria such as job performance; however, those measures are relatively unrelated to performance on intelligence tests and other common tacit knowledge measures.[2] Unlike explicit knowledge, which is knowledge that can be readily expressed in writing (like procedures, descriptions, doc- umentations, and so on), tacit knowledge is more difficult to describe because it relies on experience, gut feel, or intuition. Borrowing from the paradigm of “com- mon sense testing,” I argue that heuristics in the form of rules of thumb (RoTs) ap- plied by executives in SMBs could repre- sent tacit knowledge. An experiment exploring this paradigm was performed with three selected groups of Canadian SMBs. Executives of those groups were invited to express some of the tacit knowledge they apply in business sit- uations by requiring to make fast decisions in terms of “sets of rules of thumb” in spe- cific business scenarios. These scenarios served as rough guides to decisive actions applied in solving business problems. The research hypotheses were:

■ ■ Executives in SMBs apply tacit knowledge in their decision-making process using heuristics and

■ ■ Those heuristics could serve as a basis for some form of TKT. To collect data elements confirming (or

infirming) the proposed hypotheses, this research explored possible answers to the following questions:

■ ■ Are SMB executives applying tacit knowl- edge in their decision-making process?

■ ■ Do SMB executives use heuristics in the form of RoTs when making those decisions?

■ ■ Are those RoTs convertible to explicit knowledge? Preliminary results have confirmed the

proposed hypotheses.

Definitions

In this article, RoTs are considered as “use- ful principles with broad application, not intended to be strictly accurate.” RoTs are, therefore, rules that, while not nec- essarily always or even usually correct, are considered by those applying them as useful guidelines in situations requiring problem-solving or decision-making. Knowledge Management has been stud- ied mostly in large companies. Understand- ing Knowledge Transfer, even in these circumstances, has been a problem.[3] No systematic research is available regarding knowledge management or knowledge transfer in SMBs. In this article, I explore how TKT can occur in SMBs and analyze ways of con- verting that Tacit Knowledge into Explicit Knowledge using heuristics in the form of RoTs. Preliminary pilot research results con- firm that the business scenario approach and the use of RoTs as decision processes are realistic and practical for this kind of qualitative study. Assuming that knowledge in all its forms

is a capital asset for SMBs, a method for or-

ganizing various forms of this capital can

deliver significant benefits to those busi- nesses.[1] Further research may result in developing a valuable tool in the form of

a “wiki rule of thumb” to respond to this business need.

Knowledge Categories

Knowledge is usually categorized as ex- plicit or tacit. People can easily communicate and document explicit knowledge using standard

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can easily communicate and document explicit knowledge using standard Expert Insights Article.indd 2 10/02/17 5:29 PM

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can easily communicate and document explicit knowledge using standard Expert Insights Article.indd 2 10/02/17 5:29 PM
can easily communicate and document explicit knowledge using standard Expert Insights Article.indd 2 10/02/17 5:29 PM

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can easily communicate and document explicit knowledge using standard Expert Insights Article.indd 2 10/02/17 5:29 PM

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Tacit Knowledge Transfer in Small and Medium Businesses using Heuristics

media like manuals, documents, proce- dures, drawings, pictures, audiovisual methods, and so on. Explicit knowledge can be readily transmitted to others directly (person to person) or indirectly (person through media to person). The percep- tion of explicit knowledge is clear, visible, and documented in different forms based on the transfer method applied. Learning takes place through the transfer method used. Reasoning forms an integral part of explicit knowledge transfer. On the other hand, tacit knowledge, in- troduced by Polanyi, compares the con- cepts of “knowing what” to “knowing how.” [2] Because people are often not aware of possessing tacit knowledge (in Polanyi’s words: “we can know more than we can tell”), transfer of tacit knowledge requires personal contact and trust. Therefore, tacit business knowledge transfer usually takes place through person-to-person contact and trust. TKT is typically done by:

■ ■ following a role “model,” where the source of the tacit knowledge serves as an example;

■ ■ imitating or “mimicking” the person at the source of that knowledge; or

■ ■ using “metaphors,” like substituting one idea for another, therefore “associating” experiential learning from others. I use M3 as a mnemonic for these three

transfer forms of “Model, Mimic, and Metaphor.”

Cognitive and Technical Dimensions of Tacit Knowledge

Polanyi argued that tacit knowledge has at least two dimensions:

■ ■ a cognitive dimension (the “know-what”) that involves beliefs, perceptions, ideals, values, emotions, or mental models, and

■ ■ a technical dimension (the “know-how”) comprised of personal insights, intuitions, hunches, inspirations, or experience.[4] As a result, some forms of tacit knowl- edge can be converted to explicit knowl- edge given the proper conditions. Based on

the above premises, I focused my research on the Technical Dimension of TKT. My study hypothesis is that RoTs can fa- cilitate the transfer of some of this Techni- cal Dimension part of Tacit Knowledge.

Background and related Work

The expression “Rules of Thumb” has many interpretations, from unsupported claims that it originated from a British law that limited the width of a rod that a man may use to beat his wife (!?), to “common sense” or heuristics. 1 [5]

The Problem

One of the main challenges associated with knowledge management is in its ambiguity and lack of consistently accepted definition. Unfortunately, knowledge management is also too easily associated with tools rather than processes or ways of thinking.[6] The business knowledge of an execu- tive is that person’s expertise and skill ac- quired through experience or education. Many firms, particularly large multina- tionals, use some form of knowledge man- agement systems or processes to capitalize on the wealth of their employees’ business knowledge. Part of that information, in the form of explicit knowledge, is represented using various technology tools like Man- agement Information Systems, Data Min- ing, Expert Systems, or Neural Networks, to name a few. Organizations use knowledge manage- ment as a strategy to turn their intellec- tual assets or creative capital into greater

1 A heuristic technique (from ancient Greek, “find” or “discover”), often called simply a heuristic, is any ap- proach to problem-solving, learning, or discovery that employs a practical method not guaranteed to be optimal or perfect, but sufficient for the immediate goals. Where finding an optimal solution is impossible or impractical, heuristic methods can be used to speed up the process of finding a satisfactory solution. Heuristics can be mental shortcuts that ease the cognitive load of making a decision. Examples of this method include using a rule of thumb, an educated guess, an intuitive judgment, stereotyping, profil- ing, or common sense. Ref: https://en.wikipedia.org /wiki/Heuristic

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ing, or common sense. Ref: https://en.wikipedia.org /wiki/Heuristic Expert Insights Article.indd 3 3 10/02/17 5:29 PM

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