Tacit Knowledge and Moral Leadership as a Source of Business Value

In Erden and Nonaka’s paper “Quality of Group Tacit Knowledge” they introduce the idea that business value derives from tacit knowledge — that is, the knowledge that can only be gained through experience.  Tacit knowledge cannot be codified, explicated, or completely documented.  It is expensive to create and difficult to share.  Therefore, a firm that has a high quality of shared tacit knowledge will be able to stay ahead of competitors that cannot acquire that knowledge.

Understanding the distinction between tacit and explicit is essential to understanding other distinctions, such as the difference between rules and norms, and how legal differs from ethical, which differs from moral.

Rules vs. Norms

Rules are explicit prohibitions or requirements that prescribe specific consequences resulting from violations.  By contrast, norms are shared expectations of behavior (like manners) that don’t suggest specific consequences.  Norms are tacit social expectations.  The expectations of a norm may sometimes made explicit (e.g., “Don’t cut in line.”), but the consequences are not.  Consequently, norms are enforced through social processes, such as shaming or ridicule, rather than through judicial or bureaucratic processes.

This excerpt from an insightful TED talk by Clay Shirky called “How Cognitive Surplus Will Change The World” illustrates both the difference between a rule and a norm, and what can happen to culture when norms become explicitly stated as rules.

Legal vs. Ethical Vs. Moral

Laws result from legislative processes.  They represent rules laid out by the government and are attached to specific consequences, including maximum or minimum penalties, sentencing guidelines or other disincentives.  On the other hand, ethics do not typically result from legislative action.  They emerge from social processes particular to a group with aligned interests, such as a professional society or a guild.  Ethics are shared expressions of values and may be codified as rules of behavior, but they are typically enforced outside of government — i.e., by the specialty group itself.  Often, the punishment for breaking an ethical expectation is excommunication from the group, such as disbarment (for attorneys) that may result in a loss of livelihood.  In contrast to laws and ethical codes, morals exist at the scale of the individual.  They are not necessarily shared or negotiated among many individuals in a group.

It is possible for behavior to be legal, but unethical or immoral.  Similarly, moral behavior might be unethical or illegal.

Management vs. Leadership

The final important distinction to make is between management (explicit) and leadership (tacit).  In this video, Seth Godin tries to clarify this distinction, although his explanation is still more inspirational than descriptive.

Managers operate within a bureaucratic or administrative structure.  Their authority to influence the behaviors of others reposes on the organizational structure: it’s policies, procedures and allocation of resources.  According to Godin, managers work towards the explicit goal of incremental improvement within an existing paradigm by coercing compliance from subordinates.

By contrast, leaders work outside the bureaucratic structure of performance reviews, merit pay increases, and annual bonuses.  In Godin’s view, leaders empower others to accomplish things previously thought impossible.  Certainly, both managers and leaders influence the behavior of others.  However, moral leadership does not exert this influence for the benefit of the leader (such as a Chief Executive Officer), but rather for the benefit of the follower, or for society.  Thus, real leadership is an act of service.

Godin believes that the industrial paradigm of the modern corporation was short lived and is now essentially over.  What brought it to an end, in his view, is the Information Revolution, which he believes is exemplified by Google.

Godin’s critique is essentially consistent with Erden and Nonaka’s thesis that shared tacit knowledge is now the principal source of value in any firm.  Godin points out that information-communication technology has reduced the marginal cost of explicit information to essentially zero and brought transaction costs to such a low level that anonymous personal assistants can now be hired by the hour over the internet.  This, he says, breaks the industrial age “monopoly” from which profits were once extracted.

When explicit information, such as that which can be downloaded over the internet, is essentially free, then what what will serve as the source of competitive advantage for any firm?  Erden and Nonaka claim the answer is “tacit knowledge”, but they don’t explain from where this tacit knowledge originates.

Connecting Nonaka to Godin, we could hypothesize that the source of high quality group tacit knowledge is moral leadership — thus positioning moral leadership as the principal source of business value in the Information Age.


On Critique (vs. Criticism) in Network-based Education

In a previous post on my blog http://www.sustainableengineeringsystems.com, I explained a concept called Network Based Education that described: Self Learning, Learning from a Teacher, and Peer-to-Peer learning. That particular blog post pointed out that peer-to-peer learning has some of the greatest potential for improvement and is subject to the Network Effect in which more students = more knowledge = more interaction = a better experience for everyone.

Now we can start describing what this “better experience” is in relation to Peer-to-peer learning. To start, let us take Howard Rheingold, the man behind the Peeragogy Handbook. Peeragogy can be simply defined as self-organized peer learning. The handbook itself is a resource for co-learning based around the Peeragogy concept of peers learning together and helping each other to learn. The Peeragogy project seeks to empower the worldwide population of self-motivated learners who use digital media to connect with each other, to co-construct knowledge of how to co-learn.

The Handbook provided 29 chapters of information, too much to grasp at once, so the following is a summary of some of the general concepts the handbook promotes:

We are human because we learn together. Ever since the ye old days, people have gained experience, knowledge and progress by working with, collaborating and communicating with the people around them. “It is the essence of human culture”. Why change that now?

“Education is not an affair of ‘telling’ and being told, but an active and constructive process” John Dewey.  Engage, participate and be present. You might actually learn a thing or two if you do.

Ideally, the need for peer review should not exist! In a perfect world. People should be in constant and open peer review dialogue so that the need for a formal peer review wouldn’t be necessary.  To make this ideal situation a reality, it starts with small steps. It starts with questions and curiosity, with in class assignments and with the desire to make yourself and others better.

Personal Supports Peer.  How we cultivate living, responsive webs of inspiration and support that help us be more effective learners. It is the “personal learning network”

Peer Supports Personal.  You have something to offer and something to learn. You can learn a lot from your collaborative efforts.

Peer-to-peer review is a teaching technique widely used in design disciplines, like the arts.  In courses where students are expected to create original artwork, it’s essential that they understand how to give and receive what is called critique.

But peer review is also an effective way to teach writing.  The following video, No One Writes Alone, provides some noteworthy tips for how to be an effective reader providing feedback to a peer author:

  • Provide the experience of the reader, don’t get caught up about what you “ought to say.”
  • Be constructive and provide your perspective.
  • Remember that you are a collaborator – be focused and specific.
  • Point out what they did well (but don’t overdo it).
  • Ask Questions, be curious – Even the most basic questions can help.
  • Help improve the quality of the work.


Welcome to CritViz

Critviz is a program created by Loren Olsen and David Tinapple, faculty in Arts, Media and Engineering at Arizona State University to facilitate peer review. In the arts, such review is typically called critique.  When reviewing the work of peers, it is important to keep in mind that critique is not the same as criticism.

Criticism (bad) is personal, destructive, vague, inexpert, ignorant, selfish and individual.

“Your presentation sucks because you don’t even do the math right, and I wanted to know the best option for the truck because I’m thinking about buying one. You also mumble too much and speak too quiet so I can’t hear what you said so I just skipped ahead in the video to the conclusion.”

Critique (good) is impersonal, constructive, specific, expert, informed and selfless.

“The presentation could be improved by including a comparison of net present values calculated for the truck’s lease and finance options with multiple discount rates to allow the audience to identify more closely with the analysis. There seemed to be an audio problem with the recording that made it difficult to hear, so I would recommend re-recording the audio portion using an external microphone to ensure high sound quality.”

In this clip from Crazy, Stupid Love, Jacob (Ryan Gosling) exhibits characteristics of both criticism (personal, destructive, vague) and critique (impersonal, specific, expert, informed and selfless).  Whether Carl (Steve Carrell) benefits from this feedback depends entirely on whether he gets defensive, makes excuses (“They have a lot of support”), deflects, flips, or receives the criticism constructively.

Structuring Critique

Many students are new to the practice of providing critique.  To help structure their critique, they might consider adopting a reliable outline, such as this:

I. Summarize the author’s work from the authors point of view.  In the Summary, it is essential to empathize with the author to understand the purpose of their work as they might understand it themselves.  Only after the author is certain that the critic understands will they cease the struggle to be understood by explaining, rebutting, or seeking to debate the critic.

II. Critique the work.

  • Place the work in context.  What makes it original in comparison to related works?
  • Diagram (or “map) the logic.  Are the conclusions or arguments supported by the evidence presented?
  • Evaluate the importance of the work.  Are the principal points of the argument important?  To whom?
  • Assess the quality of presentation.  Is the writing clear, concise and comprehensible?

III. Make actionable recommendations, which could mean suggesting revisions, additional sources or related works, or reframing the work (i.e., looking at it from a different perspective).

Empathy: The Foundation of Moral Design

Seth Godin delivers a hilarious critique of poor design in this 2006 talk titled ‘This is Broken.”

In it, Godin lists the seven different ways he says that design can be “broken”:

  1. Not my job.
  2. Selfish jerks,
  3. The world changed.
  4. I didn’t know.
  5. I’m not a fish.
  6. Contradictions.
  7. Broken on purpose.

Excepting the last category, each of these issues demonstrates a lack of empathy — i.e., the ability to understand another person’s perspective. Sometimes empathy is confused with sympathy, but they mean different things.  Empathy requires us to use our imagination to cognitively understand the thoughts, feelings, perceptions or experiences of another person, without necessarily having those ourselves.  However, sympathy requires us to actually share the same feelings.  So we can exhibit both empathy and sympathy at the same time, but they are also separable.  For example, we might share feelings that we do not understand.  Alternatively, we might understand another’s perspective, but still not care.

Godin doesn’t point this out specifically, but the point of his talk seems to be that empathy for the user is the key to good design.  For example, in “I’m not a fish,” Godin points out that a culvert designer unable to see the culvert from the perspective of the fish may unwittingly fail to design a culvert that the fish can swim through.  Because the engineer specifying the culvert cannot actually BE a fish, or feel as a fish feels, only the engineer’s imagination could allow thinking like a fish.

Empathy is also one of the foundational pillars of morality, because moral issues only exist in the context of relationships.  Moral issues arise only because our actions have consequences for others,  When we consider these consequences in our own behavior, and consider the extent to which we might put our own well-being at risk for the sake of others, then we are thinking morally.  To understand those consequences, moral thinking requires us to be able to imagine them from the perspective of the person that will experience them.  Godin seems to be suggesting that every design constructs a relationship with the user, and where the designer imposes costs or hardships on the user (especially without the consent of the user!), then the design is immoral — and therefore subject to ridicule.

Nonetheless, Godin excepts the final category, “Broken on Purpose” from such harsh judgment.  Here, he recognizes that design sometimes can appeal only to a small niche of users that appreciate unique design characteristics that others would consider “broken.”  In this case, Godin claims, breaking the design on purpose sends a clear signal to users that correctly communicates the purpose of the artefact.

One implication of understanding empathy is a re-examination of the so-called “Golden Rule” that suggests we treat others as we expect others to treat us.  Nothing in this heuristic rule demands empathy.  That is, it requires only an understanding of ourselves — not others.  If society were entirely homogenous (all perspectives and experiences essentially the same), then perhaps the Golden Rule would work fine.  Obviously, society is not homogenous.  Therefore, the lack of empathy evident in the Golden Rule makes the rule itself amoral — i.e., lacking in moral substance.