An investigation of tacit knowledge transfer in the automobile industry

University of Wales
&
Management Development Institute of Singapore

SUBJECT (MBA) Information and Knowledge Management

LECTURER Mr. Jeffrey Tan

BATCH MBWD5 1230A

TITLE Assignment 2
Name of Student FIN No. Serial No. in Signature
marksheet
(full name as in the attendance file)
MANDEEP BHULLAR

Email address of student:

Submitted on Due Date? YES/NO (Date submitted: 09/ 07 /2012)
Submitted soft copy? YES/NO (Date submitted: 09 /07 /2012)
Word limit observed? YES/NO (No of words: 4045)

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TABLE OF CONTENTS:
EXECUTIVE SUMMARY................................................................................... 3
CHAPTER 1: INTRODUCTION........................................................................ 4
CHAPTER 2: IKM THEORY............................................................................. 6
CHAPTER 3: CASE STUDIES
Toyota.................................................................................................................... 13
Rolls Royce........................................................................................................... 16
Nissan ................................................................................................................... 18
CHAPTER 4: DISCUSSION................................................................................. 20
CHAPTER 5: CONCLUSION.............................................................................. 21
LIST OF REFERENCES....................................................................................... 22

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MANDEEP BHULLAR – G1146823W IKM

EXECUTIVE SUMMARY:

Knowledge is the most important asset among all the other corporate assets in today’s competitive
world. So it becomes more necessary for organizations to quantify the knowledge within the minds
of the knowledge workers.

The objective of this report is to study about tacit knowledge transfer techniques in Automobile
industry and to discuss the case studies. The business objectives of Automobile industry are
provided and by following them everything is explained. Based on elements the business models
which are there in knowledge transfer are given in detail. The knowledge transfer models which are
explained are related to tacit knowledge techniques.

The theory explains two knowledge management models, Nonaka and Takeuchi KM model and 4I
Model. The case studies involve three automobile companies. The Toyota, The Rolls Royce and
finally The Nissan are the three companies, which has been studied in detail. The knowledge transfer
techniques practised by each of them are actively related to the theories of IKM models.

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An investigation and evaluation of the tacit knowledge transfer techniques used by
automobile industry.

Chapter 1: INTRODUCTION

1.1 Background:

Industries implementing Knowledge Management practices face a number of problems
while deciding the approaches they want to follow. Knowledge management includes
various processes which manage the knowledge of an organization. Knowledge
Management approaches are applied on two forms of knowledge: tacit and explicit.
Explicit knowledge is present in tangible forms and many people can share the same
explicit knowledge. On the other hand, tacit knowledge is the knowledge held by an
individual in his head and it is more difficult to extract and express it clearly. (Dalkir,
2005) Tacit knowledge is unique and therefore it’s very important to manage it and retain
it. It is obtained by experiences and learning at work as well as daily life.

Tacit knowledge of employees is an asset for an organization as success of an
organization depends upon its ability to make best use of its knowledge assets. The
knowledge of automobile industry is generally tacit and remains within the heads of its
employees. Therefore there is a need to transfer the tacit knowledge of employees into
forms which can be retained by the company and used in the future. Also if the tacit
knowledge of a knowledge worker is retained by an organization then it can be used by
other employees for bringing competitive advantage to the company.

To retain the tacit knowledge of automobile companies, managers need to find the
employees possessing the knowledge which is useful for the company in present and
future and then to arrange the kinds of interactions between knowledgeable individuals
that will help the organization perform its current tasks, transfer knowledge from one part
of the organization to another. Automobile companies need transfer knowledge in
between various units of the company. Tacit knowledge transfer at different levels in
automobile industry helps in delivering innovative products.

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1.2 Problem Statement:

What are the various ways to capture the present tacit knowledge of employees so that it can
be used and shared among the organization members?

1.3 Objectives:

· To capture the tacit knowledge of potential employees before they leave an
organization.

· To transfer important information from well experienced employees to new
employees.

· To fill the knowledge gaps among the employees in different departments of company
by sharing knowledge.

1.4 Methodology:

Methodology of this research article can be divided into three steps in which work has
been done. First step involves collection of relevant data and case studies. Tacit
knowledge theory is taken from Knowledge Management textbooks and case studies
are taken from online articles and journals. Scanning of data is done to extract the
useful data from all the collected data. This is the most crucial work as using the
irrelevant data can move the research in wrong direction. In step two after brief
introduction theory related to topic is presented. Third and the final step include
description of three case studies of automobile industry, their relationship to theory
and conclusion. At every step work done is related to the problem statement to make
sure that the research article is able to answer it.

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Chapter 2: IKM THEORY

In today’s competitive world knowledge is an important resource of an organization
which it is not evenly distributed within an organization so there is a need to protect,
cultivate and share this resource among all the members of the organization. The type
of knowledge referred here is the experiences and expertise in the mind of knower.
Tacit knowledge transfer is an important approach followed by various industries so
that expertise of a person in an organization is available to all those who presently
need it and can be retained by the organization for future generations. Knowledge
remains tacit until it is within the head of an individual and once it’s shared with
others it becomes explicit. (Dalkir, 2005) Explicit knowledge can be used in multiple
ways by an organization.

There are various IKM models which describe the tacit knowledge transfer. Some of
them are:

 The Nonaka and Takeuchi Knowledge Spiral Model

 The 4I Model Of Organizational Learning

2.1 The Nonaka and Takeuchi Knowledge Spiral Model

This model is based on understanding the knowledge and converting it from tacit to
more explicit forms and back again. According to this model there are four modes of
knowledge conversion.

 Socialization : From tacit knowledge to tacit knowledge

 Externalization: From tacit knowledge to explicit knowledge

 Combination: From explicit knowledge to explicit knowledge

 Internalization: From explicit knowledge to tacit knowledge

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Source: http://nicosord.hubpages.com

Socialization (tacit to tacit):

Almost all the knowledge resides in the brain of an individual and there should be a
way to transfer this knowledge. Socialization aims at transferring tacit knowledge by
face-to-face social interactions. It involves attaining of mutual understanding by
sharing of mental models. There are many experiences, expertise and skills held by an
individual which can be never shared without socialization. It is the easiest way of
exchanging knowledge because we can socialize with people anytime and anywhere,
it might be travelling in the train or meeting at the coffee machine. This way may be
useful to gather the tacit knowledge of employees retiring and leaving the company.
Advantage of this method is also its disadvantage because even after sharing the tacit
knowledge it remains tacit only because it is not recorded into any form. Although it
is an effective method of knowledge transfer but it is very time consuming and all
knowledge cannot be easily distributed using this mean.

Externalization (tacit to explicit):

The externalization process gives tangible form to tacit knowledge and converts it to
explicit knowledge. It is the process in which tacit knowledge becomes explicit and
can take shape of concepts, models, metaphors or hypothesis (Nonaka and
Takeuchi,1995, p.4). This process involves a third person who will interview the
individual with tacit knowledge to extract the knowledge content and convert it into
some explicit form. After externalization knowledge becomes tangible and permanent
for the organization and can be used whenever needed in future.

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Combination (explicit to explicit):

This process involves transforming separate parts of explicit knowledge into one
combined explicit form. No new knowledge is created in this process rather existing
knowledge is recombined and converted into new report or database. Advantage of
this process is that more people can understand and use the content.

Internalization (explicit to tacit):

Internalization involves the conversion of newly gathered knowledge into the mental
model. It is referred as “learning by doing”. (Dalkir, 2005) Internalized knowledge
can be used in a broader, extended and reformed way along with the tacit knowledge
of an individual. This changes the mental knowledge of an individual, which means
they do the same work in a different way. This way people can internalize other’s
experiences to solve their problems and enhance their performance.

2.2 The 4I Model Of Organizational Learning

Source: Dalkir, 2005

Employees of an organization play a significant role in acquiring the organizational
knowledge. Knowledge acquired by an individual is a social process that cannot occur
without group interaction. Individuals learn from group interactions and groups learn from
individuals. The Four I model of organization learning states that organizational learning
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includes a strong relationship between comprehending new learning and using what is learnt.
The four I’s of social and psychological processes link individual, group and organizational
levels of learning. The four I processes of Crossan are:

 Intuiting

 Interpreting

 Integrating

 Institutionalizing

This model was further modified by Zietsma et al. (2002) who included the process of
attending at intuiting stage and experimenting at interpreting stage. All the employees
working in an organization performs knowledge creation and capture. It can be done as
members of community of practice (CoP) or individually by performing some activities to
create, capture and codify the knowledge while doing jobs. Within an organization employees
share perceptions and together interpret information and experiences. (Cohen and Levinthal,
1990) This knowledge acquisition exceeds the employees and is coded into corporate
memory. The integrated knowledge of employees forms the institutional knowledge.

2.3 Methods of tacit knowledge transfer

There any many tacit knowledge transfer techniques used by organizations to acquire the
knowledge of the employees in the company and retiring employees who represent the
knowledge “walking out of the door” . Parsaye (1988) mentioned three methods of
knowledge acquisition from individuals and groups:

• Interviewing experts

• Learning by being told

• Learning by observation

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Interviewing Experts:

INTERVIEWING
EXPERTS

STRUCTURED STORIES
INTERVIEWS

Source: Researcher

Two techniques used for interviewing of experts are structured interviewing and storytelling.
The method is used to capture the tacit knowledge of experts into more explicit forms. Many
organizations use this method to record the knowledge, learning and experiences of retiring
employees. The interviewee must be prepared with the sample of questions and goals of the
session conducted. The two types of questions used in structured interview are open and
closed questions. Open questions are broad with few constraints and allow the expert to give
free response. On the other hand, closed questions put restriction on the amount and type of
information that expert will deliver through his/her response.

It is important to capture the exact meaning of the thoughts shared because interview
participants may have different mental models. Four approaches used by interviewer in
reflecting listening are: Paraphrasing, clarifying, summarizing and reflecting feelings. At the
end interviewee can validate if knowledge captured is complete and correct.

Story telling is an efficient technique used to capture and codify the tacit knowledge in an
organization. Within an organization stories can include informal narration of management
actions, employee interactions and other events. Delivering information in the form of story,
results in having long lasting impact on the memory of listener. Organizational story telling
should be conducted in a way that it is able to communicate knowledge and learning within
the story. The organizational lesson or moral of the story should be properly learnt,
remembered and acted upon by the employees of the organization.

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Story telling is an interactive way to communicate common values and good practice to
capture, codify and transmit valuable tacit knowledge.

Learning by being told:

This method involves two simultaneous approaches, interviewee delivers his knowledge and
simultaneously knowledge manager validates the knowledge and converts it into explicit
form. Three approaches used in this method are: domain and task analysis, process tracing,
protocol analysis and simulations. Tools can be software programs such as models,
schematics and maps.

TASK
ANALYSIS
Looks after the key task performed by expert
Characterizes the task

PROCESS
TRACING
Asks matter expert to "think aloud" while solving problem
Tries to detect the psychological process used by expert

PROTOCOL
ANALYSIS
Elicits verbal reports from expert participants

Source: Researcher

Learning by observation:

In learning by observation an expert is given a case study or problem which he has to solve
with his own expertise. Learning by observation involves giving sample problem or case
study to expert and then he/she solves it. Although there is no way to observe an individual’s
knowledge but in this way his expertise can be identified. Audios or Videos can be used to
record the expert recommendations and they can be used repeatedly in future. While
recordings are being done, the individual must always be present with the expert. For
physical demonstrations cheap camcorders can be used. However, for software
demonstrations specific software needs to be used to record the actions directly from desktop.

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Using such simple techniques core information and demonstrations can be captured. In this
way tacit knowledge of experts can be converted into permanent explicit form.

Other methods to transfer tacit knowledge are

E-learnng Action Road Maps
learning

Ad hoc sessions Learning
histories

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Chapter: 3 CASE STUDIES

3.1 TOYOTA

Toyota is one of the world’s best Japanese automobile manufacturing companies which
manufacture a wide range of products including subcompacts, luxury, sports, trucks, buses,
hybrid cars etc. Toyota products are available in all five continents of the world. Toyota
performs knowledge sharing practices in company as well as among suppliers also. The case
throws light on the various tacit knowledge transfer techniques used by Toyota.

Source: http://topnews.in/usa/millions-toyota-recalls-leave-brand-undented-215851

In today’s knowledge intensive era managing knowledge is as important as manufacturing
goods. Toyota transfers tacit knowledge of its employees within its production network.
Toyota along with its suppliers uses six techniques to transfer the tacit knowledge and share it

Toyota holds supremacy in transferring productivity-enhancing knowledge throughout the
network (Nishiguchi, 1994;Lieberman, 1994). The techniques used by Toyota in knowledge
transfer are:

1) Supplier Association (kyohokai): Toyota has supplier association in Japan which
promotes “mutual friendship” and “exchange of technical information” between
Toyota and its suppliers. It has three main purposes:

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 Transfer of tacit knowledge exchange between Toyota and its member
companies.

 Training and mutual development among member companies

 Socializing events (internal Toyota Document, 1996)

The core objective of supplier association is to create alliance between members and
transfer tacit knowledge via multi-lateral knowledge transfers.

2) Voluntary Learning Teams (jishuken): OBCD (Operation management consulting
division) of Toyota promotes knowledge sharing with its suppliers in a way which is
unique in the automobile industry. Toyota has organized key suppliers into groups
which help each other in productivity and quality improvements by sharing their tacit
knowledge. The groups are changed after every three years by Toyota to get diversity
in ideas and grouping of suppliers is based on:

 Geographic proximity

 Competition

 Experience with Toyota

Every year suppliers meet OBCD managers to decide theme of the project and the motive
behind it is to help each other with the crucial business issues by sharing knowledge and
expertise. It helps in increasing productivity in areas of common interest like reducing lead
times or inventories. This practice is helpful both for Toyota and its suppliers.

3) Problem Solving Teams:

Jishuken teams are created to transfer the knowledge of network workers to other workers.
Apart from jishuken teams Toyota also has Problem solving teams who use the knowledge
captured by jishuken teams to solve the various problems in the network. For example,in
some situations the supplier may face quality problem in which the root cause of problem is
not identified. In such cases, a problem solving team of experts will be setup who will
collectively use their knowledge to solve the problem.

4) Inter-firm Employee Transfers:

It is one of the well known practices among Japanese companies. In this practice the
employees are transferred from one office of a firm to the office where his expertise in

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required. In this way the employees remain with the company and at the same company can
use their tacit knowledge anywhere within the firm. This technique also helps in transferring
tacit knowledge of an expert. When the transferred expert joins new office of firm, he shares
his experiences and know how’s with other employees and transfers his tacit knowledge to
them.

It is also an important mode to transfer knowledge to the suppliers. Toyota provides its
performance feedback to suppliers and checks if they are using new knowledge or not. There
are various ways used by Toyota to give feedback to their suppliers and motivating them to
use the latest practices for improving quality as well as productivity. All the necessary
changes implemented by suppliers are documented.

5) Creating Organizational Units for Accumulating Knowledge in the Network:

Toyota has created various units for knowledge acquisition, storage and diffusion for
increasing the ability to accumulate valuable knowledge within the organization network. By
creating organizational units which have accumulating knowledge residing within the
network, Toyota has been able to systematically build and to existing stock of knowledge. In
addition to this, the network members also know where to find different types of knowledge.
This approach helps in transferring tacit knowledge into a stock of knowledge which is easy
to access within the network.

6) Creating Multiple Knowledge-Sharing Processes and Nested Networks in Larger
Networks

Toyota introduced various processes for sharing explicit and tacit knowledge within the
network. In this the knowledge type is matched with the process type so that knowledge
flows in the most efficient manner. For example Supplier Association is a process used for
quickly distributing explicit knowledge to all members of the network. But this process also
allows the multi-lateral transfer of tacit knowledge regarding specific topic. OMCD and the
problem solving teams engage in bilateral tacit knowledge transfers of a particular type. Thus
there are varieties of processes which members can select to get different types of knowledge.

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3.2 ROLLS ROYCE MOTORS

Rolls Royce has not manufactured cars since 1971 and currently their car manufacturing is
done by Rolls Royce Motors Cars Ltd. It is an organization which manufactures motor
vehicles of top quality. Rolls Royce brand stands for its quality, design and performance. The
KM team at Rolls-Royce is Derby (UK) based and provides a varied and comprehensive
knowledge support services to the company’s engineering teams. The following case study
reveals the tacit knowledge transfer practices of Rolls Royce.

Source: http://symbolphotos.blogspot.sg/2010/04/rolls-royce-logo-photos.html

Knowledge transfer and retention strategy of Rolls Royce focuses on the following functional
areas Engineering, R&D and Quality Assurance. Core Knowledge which company wants to
retain is tacit knowledge of employees. Tacit knowledge Transfer techniques used by Rolls
Royce are as follows:

1) Communities of Practice (CoP):

Employees having common interest and identity form a group within the organization to
share knowledge and experiences. This practice of forming such groups at workplace is
called community of practice. This practice is used by Rolls Royce to capture and

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transfer tacit knowledge of employees. As technological knowledge lies within the heads
of individual experts so this practice helps in sharing and evolving the knowledge. As a
result, employees can enhance their learning as well as help each other through one’s
expertise. This is tacit to tacit transfer technique as knowledge of one person becomes
knowledge of other after sharing it.

2) After action Reviews:

Employees in an organization work in different departments and perform various
tasks to complete the projects. Once the project is over, they hardly have any time to
sit together, review each other’s work and give suggestions to improve it further.
However Rolls Royce performs after action review practice by holding regular
meetings in which project managers and engineers share their individual lessons
learnt and positive or negative experiences gained while working on the project.
Everyone has different learnings and experiences from the distinct projects and
discussions are performed to extract useful knowledge from those lessons. A report
of discussions is prepared after every meeting. These sessions help employees in
gathering new ideas of their work. In this way tacit knowledge of employees in
converted into both tacit and explicit form.

3) Expert Interviews:

Expert interviews involve asking the experts about their experiences and tasks performed in
certain situations. The success of this method depends upon quality of questions asked and
ability of expert to articulate his knowledge. Interview can be structured or unstructured.
Unstructured interviews are unplanned with on the spot questions and even responses are not
evaluated whereas, structured interviews are pre-planned interviews in which questions are
already decided and expert responses are evaluated. Rolls Royce holds the expert interviews
to make their employees learn from the expertise of persons who have achieved great success
in their field. Retiring employees in Rolls Royce share their experiences and learning by
giving an interview. They share their problems and stories related to the problems in order to
overcome it. They even give answers to questions asked by employees; this further improves
the understanding and clears the doubts of those who are listening to the interview. Expert
interview is an excellent method of tacit knowledge transfer.

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3.3 NISSAN

Nissan is a well known automobile company with 31 production facilities in 16 countries and
selling motor vehicles in more than 160 countries. It is consider one of the high quality
leaders in automobile industry. It is well known for its value creation objective and attractive
designs. Various tacit knowledge transfer techniques used by Nissan are mentioned in the
following case study.

Source: http://world-viewer.com/nissan-sentra-v16-16-wagon.html

Nowadays competitive advantage not only depends upon capital and equipment management
but also on information and knowledge management. Knowledge Management involves
techniques to utilize information and knowledge assets of an organization especially tacit
knowledge. Some tacit knowledge transfer techniques followed by Nissan are:

1) E- Learning :

E-learning refers to electronic learning in which there is no teacher to provide any training
rather computerized programs are used for training purposes. Nissan has large global
footprint which demands high quality of leaders worldwide. The most deserving 60 leaders
among these are identified by Nissan from 10 different countries. They have qualities to
perform the leadership roles in future. These leaders belong to different geographic locations

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across the globe and have varied leadership skills. To work for Nissan as a leadership group
they need to learn the Nissan’s values, vision and mission.

Nissan want to provide a common leadership program to connect the leaders worldwide
without physical movement. This objective is achieved by the process of E-learning. Nissan
created leadership development program with optimal training efficiency named Global
Organization Leadership Development (GOLD) It provided three self-study e-learning
courses and four real-time which were delivered using DDI’s virtual classroom technology.
All the leaders were mailed the e-learning program and using this they formed a group of
leaders who never met each other. Using this program all the group members interacted with
each other to share ideas and knowledge.

2) Interview with experts:

Expert interviews are sessions in which people who are experts in a particular subject,
program or process share their knowledge with others. Interview with experts is an efficient
mode to make tacit knowledge more explicit.

Nissan use both semi structured and structured interview processes to get the expert
opinions. The objective of semi structured interview is to enrich the depth and details of
information provided by the matter expert. (Cooper and Schindler 2001) Nissan organizes
expert interviews within the company when they have unique knowledge of experiences or
expertise and they want to share it with the next generation of the company.

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Chapter: 4 DISCUSSIONS

Knowledge management is a core management function of any organization and within
knowledge management tacit knowledge is very essential. Performance of an organization is
highly dependent on its tacit Knowledge of its human assets. So the methods for capturing
tacit knowledge should be efficient and effective. From the case studies of the companies it is
found that:

Toyota uses six different processes for tacit knowledge transfer. The knowledge management
processes used by Toyota are very different and innovative; they are not same as the
techniques provided in the theory. It reflects that Toyota manages its tacit knowledge in
Toyota’s Way and does not completely rely on

IKM theories. Toyota is leading the automobile industry which shows that the knowledge
transfer techniques followed by them are efficient.

Rolls Royce uses two techniques out of which communities of practice and expert interviews
are included in theory whereas after action reviews are their own innovative way. This shows
Rolls Royce use the past theory practices but at the same time they create their own practices.

Nissan uses expert interview and E-learning processes for transferring tacit knowledge of
employees. Both techniques used by Nissan are mentioned in the theory. E-learning is an
efficient process which is not practised by many companies but Nissan is making good use of
it for training its overseas employees. Nissan can use some more techniques to transfer its
tacit knowledge in a better way.

In three case studies different approaches to transfer of tacit knowledge are mentioned but
their objectives are same and are based on standard IKM models. All the case studies aim at
capturing the tacit knowledge to make the best use of it within the respective organization.

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Chapter: 5 CONCLUSION

Knowledge management itself changed a lot which means it is not constant depends upon
time and is changing with the enthusiastic environment. From the explicit knowledge of
resource then they changed to implicit knowledge to acquire the position in market. The need
of the time is to capture the knowledge within the heads of experts and store it in explicit
forms which can be used anytime in future circumstances. In this case of Automobile
industry, they tell how they are defining its own position in market globally. If the
information of knowledge is channelized, formalized, documented and applied at right time
means the tacit knowledge can be utilized as an asset. For an effective knowledge
management not only the competitive advantage is needed but it should also develop the
performance of the organization.

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LIST OF REFERENCES:

Approaches to Knowledge Management Practice [ONLINE] Available at:

http://www.knowledgeboard.com/download/3512/Tacit-vs-Explicit.pdf [accessed 30 June

2012]

Case Study: E-learning Develops Global Leader Population at Nissan [ONLINE] Available

at: http://www.astd.org/Publications/Newsletters/Learning-Circuits/Learning-Circuits-

Archives/2012/03/Case-Study-E-Learning-Develops-Global-Leader-Population-at-Nissan

[accessed on 6 July 2012]

Creating and managing a high performance knowledge-sharing network [ONLINE] Available

at: http://dspace.mit.edu/bitstream/handle/1721.1/1441/147b.pdf [accessed on 3 July 2012]

Dalkir K (2005), Knowledge Management in Theory and Practice, Elsevier Butterworth-

Heinemann, Oxford.

Nissan Sustainability Report 2010 [ONLINE] Available at: http://www.nissan-

global.com/EN/DOCUMENT/PDF/SR/2010/SR10E_P057_Employees.pdf [accessed on 6

July 2012]

Nonaka and Takeuchi knowledge management cycle. [ONLINE] Available at:

http://nicosord.hubpages.com/hub/Nonaka-and-Takeuchi-knowledge-management-cycle [accessed on

30 June 2012]

[ONLINE] Available at: http://www.ikmagazine.com/xq/asp/sid.0/articleid.29FACC72-F836-

419E-94D2-

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Retaining Today’s Knowledge for Tomorrow’s Workforce [ONLINE] Available at:

http://www.apqc.org/knowledgebase/download/232364/a%3A1%3A%7Bi%3A1%3Bi

%3A2%3B%7D/inline.pdf

The link between sustainability and absorptive capacities: the case of the electric car in

Renault Available at: http://www.strategie-aims.com/events/conferences/4-xxeme-

conference-de-l-aims/communications/1430-the-link-between-sustainability-and-absorptive-

capacities-the-case-of-the-electric-car-in-renault/download

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