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Posted: April 9, 2014
Matt Palmquist

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

 


 
 

(Tacit) Knowledge Is Power

Bottom LineCompanies gain a competitive advantage when different divisions, such as sales and marketing, share non-quantifiable information. But to support the flow of this all-important tacit knowledge, managers must encourage social ties and cross-functional relationships.

Salespeople occupy unique positions in their companies, transcending traditional organizational borders. In a business-to-business context, they have one foot in their home office and the other in their clients’ conference rooms. And in a business-to-consumer model, they play a vital frontline role as customers increasingly demand sophisticated or tailor-made solutions to their needs. As a result, salespeople have a rarefied access to corporate, customer, and even competitor data. But how can they put this boundary-spanning knowledge to the best use?

To be sure, explicit data (such as sales figures or consumers’ shopping patterns) can be codified into spreadsheets or databases and therefore easily integrated into a company’s IT setup for further analysis and review. But another type of information that salespeople can glean, dubbed tacit knowledge, can’t simply be written down or quantified. It’s the look on a negotiator’s face, the ability to speak a different language, or the learned experiences gained from working with a partner. And research suggests it can potentially improve firms’ efficiency, value creation, and financial performance.

Imagine salespeople who, through conversation and consultation, come to discover more about what certain C-level executives in a client’s organization want in a product or service. Armed with this tacit knowledge, the salespeople could help refine their firm’s marketing message, develop better solutions for the customer, and, in turn, increase their own company’s revenue. But in order for them to do that, management must enable the sales force to transmit such tacit information to headquarters so that the company can use it to gain a competitive advantage.

According to a new study that investigates the influence of tacit knowledge on marketing success, hitches occur when firms lack the internal social networks to convey this information. After all, it’s second nature for salespeople to concentrate on forming social networks with customers or clients outside the company; these external bonds are closely tied to their ability to boost sales. But the advantages of forming internal social networks may be less clear to salespeople and their supervisors. The resulting missed network connections represent so-called structural holes that have been shown, in other contexts, to damage companies’ ability to obtain and disseminate knowledge throughout the organization.

Missed network connections represent structural holes that can damage companies’ ability to obtain knowledge.

The authors of this new study examined the elements that influence tacit knowledge exchange between two departments: sales and marketing. They typically operate separately, but have much to gain from collaboration. Accordingly, researchers surveyed 200 business-to-business salespeople at various companies to explore how their success or failure in transferring their acquired tacit knowledge affected their firm’s overall marketing success. The analysis showed that accurate and comprehensive communication between the two sectors led to improved tacit knowledge flow, and that the more co-workers trusted one another, the more freely they traded tacit information. These two findings highlight the importance of encouraging recurring informal interactions between colleagues, who must necessarily undertake some risks when sharing the implicit knowledge that they alone possess.

Getting salespeople and the marketing team in the same room also increased the flow of intangible information. When employees had the chance to interact on a regular basis—whether through training sessions, meetings, or daily encounters—they were more likely to form social ties that provided a platform for the exchange of non-quantifiable data. Finally, when top management emphasized the importance of knowledge sharing, employees complied.

Surprisingly, the oft-cited tension between the marketing and sales departments played no significant role in the transfer of tacit knowledge, the analysis revealed. Most importantly, a positive flow of tacit knowledge definitely resulted in success, measured as improvements to marketing programs’ efficiency, effectiveness, and level of innovativeness, the authors found. “The tacit knowledge shared by salespeople brings a deeper understanding of the marketplace and the customer to the decision-makers in marketing, which allows them to make better informed decisions,” they write.

How can companies prompt more collaboration and tacit knowledge sharing between the vital marketing and sales wings? They should focus on building a culture of trust among colleagues, encourage social ties between departments, and stress how much they value the informal “watercooler” discussions that can turn an idea into action.

Beyond the obvious bonding exercises, managers should consider establishing training sessions—or, eventually, sales teams—that bring employees from the two departments together. In doing so, top-level executives will not only allocate the necessary resources and make the requisite organizational changes, but also send an unmistakable signal that the firm values tacit knowledge exchanges. Much of the onus for change also falls on salespeople, who too often dwell on the obvious external ties required to seal the deal, while neglecting the need to foster the internal relationships that can lead to even more fruitful rewards.

Source: Improving Marketing Success: The Role of Tacit Knowledge Exchange Between Sales and Marketing, by Dennis B. Arnett (Texas Tech University) and C. Michael Wittmann (University of Southern Mississippi), Journal of Business Research, Mar. 2014, vol. 67, no. 3
 

 
 
 
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