What’s So Great About Tacit Knowledge?
| Peter Klein |
The knowledge management and capabilities literatures are in love — in love with tacit knowledge. Managing tacit knowledge, leveraging tacit knowledge, growing tacit knowledge — these are seen as the keys to achieving sustained competitive advantage. Economists, too, have gotten into the act, asking how incentive plans and the allocation of decision rights affects employees’ use of dispersed, specific knowledge. And, of course, F. A. Hayek’s analysis of socialism is built on the notion that centralized systems without markets and prices cannot make effective use of tacit knowledge.
But is tacit knowledge always “better” — more correct — than explicit knowledge? The knowledge management and capabilities literatures seem to take this for granted. And yet, a growing body of evidence on behavioral anomalies suggests that cognitive biases and heuristics can render individual judgments unreliable.
As Alex points out, diagnoses made by expert systems are on average more reliable than diagnoses made by physicians, despite the latter’s personal relationships with, and specific knowledge of, their patients. Doctors, quite simply, forget things and make mistakes. It’s not their fault; they are only human, after all. But that is the problem. Writes Alex: “we (doctors and patients) have a model in our head of the nearly omniscient doctor carefully attending to the needs of every patient on an individualized basis — medicine as craft. Instead what we need is medicine by the numbers.”
Incidentally, the Cantillon-Knight-Mises notion of entrepreneurship as judgment, discussed in several of these papers, does not assume that entrepreneurial judgments are necessarily correct, or more accurate than forecasts made by computers, only that the market process embodies a filtering mechanism for selecting those entrepreneurs whose judgments are better than those of other market participants. (See also the discussion here.)