The value of tacit knowledge for economic success

26th January 2024 By: Saliem Fakir

Michael Polanyi, the brother of the famous Karl Polanyi (the writer of The Great Transformation), says in his book, Tacit Knowledge, that “we can know more than we can tell”. He brought to the fore the importance of tacit knowledge – knowledge that comes from experience and where intuition develops as the possessor of such experience can often understand things without having the words to explain them.

Polanyi’s thesis is that there is a type of knowledge that cannot be captured by ordinary language or mathematics. Since this knowledge cannot be captured in writing, it is only discernible through action.

This means that, while we can place emphasis on the best performance during job interviews, this often does not tell us enough about embodied knowledge gained from experience. There is an extension of this idea in the wonderful research related to intelligence, creativity and wisdom being done by Robert Steinberg, who notes that “practical thinking is closer to wisdom than analytical and creative thinking” and that, in the exercise of human affairs, wisdom is visible when the actor ‘’balances different types of interests in order to seek a common good”.

The question of tacit knowledge was brought home to me one day when I was on a site tour of Sasol’s Fischer-Tropsch plant in Secunda, in Mpumalanga. The operations manager showing us around explained how he had built the plant from scratch many years ago, when he was a young engineer in the heyday of apartheid, and knew every bit of machinery, pipe and parts that forms the labyrinth which occupies acres of land.

His main point was that, having worked on the plant for so many years, he would know when the system was malfunctioning by listening carefully to the hiss of pressure valves or the rumblings of the pipes. In this way, he cuts to the chase in fixing problems as they arise.

Tacit knowledge is the hidden power to successfully run complex industrial systems and organisations. Boiler leaks and burst pipes at State-owned electricity utility Eskom’s power plants point to the loss of tacit knowledge when political optics take over from experience. Tacit knowledge will not be found in textbooks but in things learned on the job – by doing.

We can see now the challenges Eskom and freight logistics parastatal Transnet face – the loss of tacit knowledge is the cause of the faltering of these State-owned enterprises, with economywide consequences. Most of the people who can do and run things have now gone to the private sector or left the country.

Tacit knowledge is the antidote to slick talk – the one who says nothing may hold the key to success. When such a person vanishes, the truth of what he or she holds in terms of knowledge and expertise becomes apparent, but when the one who says a lot vanishes you realise you were fooled by his or her imposter expertise.

These insights also raise questions about where and from whom one takes advice and expertise.

There is this thing going around: think-tanks and consultancies calling themselves do-tanks these days. It’s the sort of thing that is put in PR brochures.

There are think-tanks that think (and they do it very well) and then there are think-tanks that do neither – they exist in name only. If Prussian general and military theorist Carl von Clausewitz were alive today, he would cringe at the idea of a policy think- tank advising on the best way to conduct war from advisers’ armchair. Is this not for the real generals?

Only trust a do-tank if it is comprised of people who have done their hard yards in real life or think-tankers who are more proximate to implementation, and not imposter experts who do all the pontification at conferences and panel discussions (the soundbite brigade) but have never built a machine, run a business or an organisation, or have implemented policy change in a world full of complex trade-offs and difficult interest groups.

Doing things in the real world is hard – especially if we need to build institutions that service the public, build bridges, make railway systems deliver on time and build industrial complexes. The most admirable example that comes to mind is to watch Taiwan; once a poor country, it now dominates sophisticated industries such as microchip manufacturing. Microchips are the oil of the modern industrial era.

Most people, myself included, have no clue what goes into the making of a pencil. By that I mean how the raw material, such as graphite, is processed, how the various ingredients are all put together, and how it gets packaged and you can order it through Takealot or buy it at the nearest CNA. Each step requires a unique set of technical skills and knowledge – from the quality of the material to the logistics of how to get it to you where you need it within the different parts of the value chain. It all looks seamless and without thought. You only get to know what goes on behind the scenes when a supply chain is broken or a system is malfunctioning.

Countries seeking to build industrial capability should heed the advice of Polanyi.

Building capability requires motivation – not subsidies and incentives that can lead to the misallocation of capital, especially to pseudo ‘industrialists’ who want to scheme off the fat rather than do anything. True industrialism is driven by intangible things that matter more than money: passion, national pride, excellence, retaining sovereignty over knowledge and expertise.

Adam Grant recently released a book, The Hidden Potential, in which he shares insights into how we learn and achieve great things against the odds through motivation, making mistakes and being persistent. Individuals and nations can accomplish great feats through organised persistence and growing their share of tacit knowledge. Or, as Gilbert Ryle, the philosopher, put it in his Concept of Mind, “knowing that” versus “knowing how” are two different things. Knowing how is the alter of high achievement and credibility.