The Real Value of Knowledge Exchange

By: Paul Hobcraft

In this series of three articles Paul Hobcraft explores the value of knowledge and education for innovation. Continuing the discussion, in part two the author investigates the various aspects of modern knowledge exchanges including their psychology, mechanisms and complexities that govern them.

In the first part of this series of posts I asked you the following: “How do we advance the learning needed for innovation?” Do we (all) agree that we need to improve the education around the subject of innovation and its management? Furthermore, can we view it as an essential discipline that should be fully recognized within our organizations? Today this discipline is not central and it is not driving the business. Surprisingly, when you stop and think about it, today it is the older, more established practices that drive the business while innovation is a responder. I think this needs reversing.

We live in knowledge-based societies and we need to constantly increase our understanding of the available building blocks for innovation. This will enable us to take hold of our endeavours, grow our wealth, and create the next generation of products or services.

Our challenges are greater and more complex today

Modern society is becoming a fairly intense place. It is growing in complexity and forcing us to constantly reduce our reaction times (i.e. we need to ‘read and react’ far quicker than in the past). We are being challenged to adapt our existing practices and processes within innovation and asked to speed up as much as possible. In fact, the CEO’s primary concern has become to quickly fill the innovation gap. Secondly, they worry over the innovation delay.

We need to find new mechanisms that allow better transfer of innovation-related knowledge

The appreciation of knowledge – its collection, its understanding and interpretation and its transformation and exploitation – is not valued as highly as it should within this need to speed up, to close gaps and reduce delay. Also, this modern context offers less incentive to promote higher value outputs that “fuel”, in turn, new innovation activity.

Hence, the production and reproduction of knowledge become key actions that drive activity and give direction to innovation. As we create, accumulate and disperse knowledge we become more engaged outside our own walls. We need to constantly seek a comparative advantage and achieve this goal by embracing more and more open exchanges for it is these types of exchanges that allow the flow of knowledge to be captured.

Another observation is that we are becoming increasingly interdependent and permeable to disturb what “we think we know” to “what we need to know”. Relationships, networks, dedicated resources as well as searching, collecting and assessing knowledge all rapidly contribute to our growing need for new capacities. Therefore, we need to build the appropriate capabilities to translate and exploit this new knowledge. Our “need to innovate” is becoming our sole means to survive and prosper in this highly competitive world. Thus, if we want to continue to create, knowledge is an integral part of the process.

Finally, knowledge cannot be left to chance. Instead, it needs a coherent, structured way to be captured, used and valued. Once again, “our knowledge” is our potentially most highly prized tradable asset – an asset that allows us to build, explore, experiment and ultimately produce innovations.

Content and context are the essential partners

As we look at innovation today, we often see that one of four aspects (setting, content, purpose and process) is either missing or under-served in the context of what an organization is trying to achieve. The ‘setting’ in which innovation is placed in is usually the most poorly described part. The ‘content’ on the other hand can fill rapidly, but this tends to be full of endeavour and activity as the results have not been as clearly articulated as they should. The ‘purpose’ and the ‘process’ make up the remaining two parts. Knowing the purpose comes from setting the context – this clarifies the inputs that form purpose. Lastly we have the process, or the means that allow the activities to flow through.

In most cases, none of these four dimensions is as solid or robust as it should be, and increasingly, new knowledge fails to be translated due to these weaknesses within our management of innovation.

Absorptive capacity becomes essential to understand

As we rely increasingly on our growing ‘interactions and linkages’, we need a system to manage this. Absorptive capacity is a concept first introduced and explored by Wesley Cohen and Daniel Levinthal in a 1990 article entitled “Absorptive capacity: a new perspective on learning and innovation. This concept can provide us the knowledge learning path for building a real “knowledge exchange” process.

On the practical side, we can learn to exploit both innovation and learning in the following ways:

Internally

1. Learning by searching – as we formalize our search activities we absorb new understanding that leads to new innovation potential.
2. Learning by doing – as we accumulate knowledge gained, we gain experience and the more we establish repetitive activities through exploring, prototyping methods and reduce the ad-hoc activities the more we can learn and gain from this approach.
3. Learning by using – as we utilize and adopt more, through exploration and adoption of new products, new technologies and methods, we are opening up to experiment and possibilities to extend this new ‘experience or knowledge’ even further.

Externally

1. Learning from advances in science and technology – as we absorb new discoveries we capitalize on adding further value or diffusing this even more.
2. Learning from inter-industry spillovers – the increasing value of cross industry collaboration and exchanges is going beyond ‘just’ spillovers, they are increasingly significant to our learning and applying different  approaches that lend themselves to a greater commonality.
3. Learning by interacting – we increasingly go ‘across’ organizations and equally move ‘up and down’ them to seek out interactions with other sources of knowledge and growing expertise. These are further augmented by external collaborative exchanges and cooperation activities allowing for deepening knowledge, greater experimentation and interactions to deliver potentially ‘richer’ innovation.

Summing up, each of these six points of learning needs exploiting in the context of innovation.

We are equally in need to recognize differences and value in tacit and explicit knowledge

The distinctions and discussions about tacit and explicit knowledge are equally important to our “knowledge exchange”. Ikujiro Nonaka discussed four different modes of knowledge conversion and subsequent organizational learning in his SECI model

1. Socialisation (the conversion of tacit knowledge to tacit knowledge);
2. Combination (the conversion of explicit knowledge to explicit knowledge);
3. Externalisation (the conversion of tacit to explicit knowledge); and
4. Internalisation (the conversion of explicit to tacit knowledge).

To explain this we need to distinguish between tacit and explicit I outlined some thoughts in a previous article “Tacit Knowledge Rich in its Innovation Implications” and further explored this in “Making the Appropriate Impact”. The critical message here is that tacit knowledge vs. explicit knowledge is where the interaction between these two is vital for the creation of new knowledge that leads to future innovation potential.

Knowledge for innovation needs to build in both formal and informal ways

I would like to end this post by noting that absorptive capacity and richer combinations between tacit and explicit knowledge deserve to be acclaimed for the vital part they play within innovation’s future health. Without new knowledge we cannot explore the potential for innovation – and this is a fact.

By Paul Hobcraft