We found that the performance of companies in relatively tacit-interactive sectors varied far more than that of other companies. The level of performance variability (defined as the standard deviation of performance divided by the mean level of performance) was 0.9 for companies in sectors with a low level of tacit interactions. Among companies in sectors with a middling number of tacit interactions it was 5.5, rising to 9.4 in sectors with a high level of interactions.
This widening variability as the extent of tacit interaction increases reflects two things. First, companies have considerable competitive headroom for improving the productivity of those who undertake tacit interactions and less headroom for improving the productivity of other workers. Second, in some highly tacit sectors, companies in the top quartile understand how to make tacit workers more effective and now have a significant performance lead on rivals that still manage for efficiency.
Tacit capabilities do not resemble IT systems or reengineered processes that can be copied easily. Their power lies in the collective company-specific knowledge that emerges over time.
Authors: Bradford C. Johnson, James Manyika, Scott C. Beardsley
Source: McKinsey Quarterly
Subjects: Management, Organizational Behavior
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