Tacit Knowledge Transfer in Small
and Medium Businesses using
Heuristics
Dr. Frankl, MBA, PhD, is a professor of
business with University Canada Wests
School of Business, and an adjunct
professor of bioinformatics at the
University of Victoria. He has managed
large-scale systems development
projects, conducted numerous IT,
telecommunications, and business re-
engineering strategic plans, and played
major roles in key business systems
development initiatives. He has
considerable experience in strategic
management planning, project
management, system development,
system metrics and evaluation
techniques, system feasibility studies,
system quality assurance, and human
resource planning. Dr. Frankl is
involved in promoting Information
Technology at the University level
(as an academic) as well as at the
industry level (as a research associate)
in the areas of systems development
techniques and knowledge transfer. He
published extensively on information
technology management, science, and
education technology topics.
Article.indd 1
Dr. Milan Frankl, MBA, PhD
Abstract: In this article, I describe an exploratory study
on Tacit Knowledge Transfer in Business, a problem of
interest to most executives in small and medium busi-
nesses (SMBs).
Although currently Knowledge Management is a sub-
ject of research in big corporations, its investigation in
the particular environment of SMBs is limited. Because
succession planning is essential for the survival of those
types of companies, finding ways of transferring tacit
knowledge can be a major benefit to them.
I propose definitions of Explicit and Tacit Knowledge
and review some of the existing literature in that area.
I conducted a survey with three control groups and
explored its results.
I hypothesize that executives in SMBs indeed apply tacit
knowledge in their decision-making process using heuris-
tics and that those heuristics could serve as the basis for
some form of Tacit Knowledge Transfer. Preliminary results
of the study have confirmed the proposed hypotheses.
Categories and Subject Descriptors
[Management]: Management techniques, knowledge
management, heuristics.
General Terms: Management, tacit knowledge, explicit
knowledge, heuristics, knowledge transfer.
Keywords: Tacit knowledge transfer, heuristics, rules of
thumb
Introduction
With more than 35 years of management practice in big,
medium, and small companies, 20 years of which in po-
sitions of senior or executive management, my intent
was to rely on personal experience to explore means of
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 Tacit Knowledge Transfer in Small and Medium Businesses using Heuristics
providing tools and techniques to senior
management of small and medium busi-
nesses (SMBs) that would enhance their
decision-making process through tacit
knowledge transfer (TKT).
Since the 1970s, researchers have been ex-
ploring new constructs in search of measures
to supplement existing cognitive ability tests
as predictors of real-world performance.
Among the most promising constructs of
business success predictors is practical in-
telligence or common sense, sometimes re-
ferred to as tacit knowledge. [1] Measures
of practical intelligence predict real-world
criteria such as job performance; however,
those measures are relatively unrelated to
performance on intelligence tests and other
common tacit knowledge measures.[2]
Unlike explicit knowledge, which is
knowledge that can be readily expressed in
writing (like procedures, descriptions, doc-
umentations, and so on), tacit knowledge is
more difficult to describe because it relies
on experience, gut feel, or intuition.
Borrowing from the paradigm of com-
mon sense testing, I argue that heuristics
in the form of rules of thumb (RoTs) ap-
plied by executives in SMBs could repre-
sent tacit knowledge.
An experiment exploring this paradigm
was performed with three selected groups
of Canadian SMBs. Executives of those
groups were invited to express some of the
tacit knowledge they apply in business sit-
uations by requiring to make fast decisions
in terms of sets of rules of thumb in spe-
cific business scenarios. These scenarios
served as rough guides to decisive actions
applied in solving business problems.
The research hypotheses were:
Executives in SMBs apply tacit knowledge
in their decision-making process using
heuristics and
Those heuristics could serve as a basis for
some form of TKT.
To collect data elements confirming (or
infirming) the proposed hypotheses, this
research explored possible answers to the
following questions:
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Are SMB executives applying tacit knowl-
edge in their decision-making process?
Do SMB executives use heuristics in the
form of RoTs when making those decisions?
Are those RoTs convertible to explicit
knowledge?
Preliminary results have confirmed the
proposed hypotheses.
Definitions
In this article, RoTs are considered as use-
ful principles with broad application, not
intended to be strictly accurate. RoTs
are, therefore, rules that, while not nec-
essarily always or even usually correct,
are considered by those applying them as
useful guidelines in situations requiring
problem-solving or decision-making.
Knowledge Management has been stud-
ied mostly in large companies. Understand-
ing Knowledge Transfer, even in these
circumstances, has been a problem.[3] No
systematic research is available regarding
knowledge management or knowledge
transfer in SMBs.
In this article, I explore how TKT can
occur in SMBs and analyze ways of con-
verting that Tacit Knowledge into Explicit
Knowledge using heuristics in the form of
RoTs.
Preliminary pilot research results con-
firm that the business scenario approach
and the use of RoTs as decision processes
are realistic and practical for this kind of
qualitative study.
Assuming that knowledge in all its forms
is a capital asset for SMBs, a method for or-
ganizing various forms of this capital can
deliver significant benefits to those busi-
nesses.[1] Further research may result in
developing a valuable tool in the form of
a wiki rule of thumb to respond to this
business need.
Knowledge Categories
Knowledge is usually categorized as ex-
plicit or tacit.
People can easily communicate and
document explicit knowledge using standard
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 Tacit Knowledge Transfer in Small and Medium Businesses using Heuristics
media like manuals, documents, proce-
dures, drawings, pictures, audiovisual
methods, and so on. Explicit knowledge
can be readily transmitted to others directly
(person to person) or indirectly (person
through media to person). The percep-
tion of explicit knowledge is clear, visible,
and documented in different forms based
on the transfer method applied. Learning
takes place through the transfer method
used. Reasoning forms an integral part of
explicit knowledge transfer.
On the other hand, tacit knowledge, in-
troduced by Polanyi, compares the con-
cepts of knowing what to knowing how.
[2] Because people are often not aware of
possessing tacit knowledge (in Polanyis
words: we can know more than we can
tell), transfer of tacit knowledge requires
personal contact and trust. Therefore, tacit
business knowledge transfer usually takes
place through person-to-person contact
and trust.
TKT is typically done by:
following a role model, where the source
of the tacit knowledge serves as an example;
imitating or mimicking the person at
the source of that knowledge; or
using metaphors, like substituting one
idea for another, therefore associating
experiential learning from others.
I use M3 as a mnemonic for these three
transfer forms of Model, Mimic, and
Metaphor.
Cognitive and Technical Dimensions of
Tacit Knowledge
Polanyi argued that tacit knowledge has at
least two dimensions:
a cognitive dimension (the know-what)
that involves beliefs, perceptions, ideals,
values, emotions, or mental models,
and
a technical dimension (the know-how)
comprised of personal insights, intuitions,
hunches, inspirations, or experience.[4]
As a result, some forms of tacit knowl-
edge can be converted to explicit knowl-
edge given the proper conditions. Based on
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the above premises, I focused my research
on the Technical Dimension of TKT.
My study hypothesis is that RoTs can fa-
cilitate the transfer of some of this Techni-
cal Dimension part of Tacit Knowledge.
Background and Related Work
The expression Rules of Thumb has
many interpretations, from unsupported
claims that it originated from a British law
that limited the width of a rod that a man
may use to beat his wife (!?), to common
sense or heuristics.1 [5]
The Problem
One of the main challenges associated with
knowledge management is in its ambiguity
and lack of consistently accepted definition.
Unfortunately, knowledge management is
also too easily associated with tools rather
than processes or ways of thinking.[6]
The business knowledge of an execu-
tive is that persons expertise and skill ac-
quired through experience or education.
Many firms, particularly large multina-
tionals, use some form of knowledge man-
agement systems or processes to capitalize
on the wealth of their employees business
knowledge. Part of that information, in the
form of explicit knowledge, is represented
using various technology tools like Man-
agement Information Systems, Data Min-
ing, Expert Systems, or Neural Networks,
to name a few.
Organizations use knowledge manage-
ment as a strategy to turn their intellec-
tual assets or creative capital into greater
1
A heuristic technique (from ancient Greek, find or
discover), often called simply a heuristic, is any ap-
proach to problem-solving, learning, or discovery that
employs a practical method not guaranteed to be optimal
or perfect, but sufficient for the immediate goals. Where
finding an optimal solution is impossible or impractical,
heuristic methods can be used to speed up the process of
finding a satisfactory solution. Heuristics can be mental
shortcuts that ease the cognitive load of making a decision.
Examples of this method include using a rule of thumb, an
educated guess, an intuitive judgment, stereotyping, profil-
ing, or common sense. Ref: https://en.wikipedia.org
/wiki/Heuristic
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