ABCs of KMTacit knowledge for business benefit
Case studies of tacit knowledge for business benefit (part 1): Improved quality and reduced recalls
This article is part 1 of a series of case studies of tacit knowledge for business benefit.
“Tacit knowledge” is an important type of knowledge. It has its origins in Michael Polanyi’s books Personal Knowledge (1958)1 and The Tacit Dimension (1966)2, and its relationship with another type of knowledge, “explicit knowledge,” was later proposed by Ikujiro Nonaka (1994)3.
Just as there are multiple definitions of knowledge management (KM), there are numerous definitions of tacit knowledge. One of the best is that proposed by Stuart French4:
Tacit knowledge encompasses the deeply personal, experience-based understanding and skills developed through pattern recognition and practical engagement. This type of knowledge is intuitive and often unconscious, expressed through actions and reactions rather than words. It thrives in environments that encourage experiential learning and collaboration, where it can be naturally shared through doing, observing, and mentoring.
Engaging this tacit knowledge can bring very big benefits to business. The tacit knowledge that business can engage includes the tacit knowledge of employees, middle managers, and stakeholders including customers, clients, and suppliers.
This first article in the case studies of tacit knowledge for business benefit series presents three case studies, one of failure and two of success, highlighting the benefits of engaging the tacit knowledge of customers to improve quality and reduce recalls.
Case study 1, tacit knowledge failure – Toyota
- Millions of vehicles recalled. In 2009 and 2010, Japanese carmaker Toyota recalled5 millions of vehicles in relation to sudden unintended acceleration that had caused numerous accidents. Recalls continue to be a significant and very costly6 problem for the automotive industry, with over 27 million vehicles recalled7 in 2024 in the U.S. alone. Recalls are also a serious problem in other industries, for example the food industry8.
- 89 deaths, 57 injuries, 6,200 reports of sudden acceleration. In May 2010, the he U.S. National Highway Traffic Safety Administration (NHTSA) released updated statistics9 showing that there had been more than 6,200 reports of sudden acceleration in Toyota vehicles from 2000 to mid-May, with these reports including 89 deaths and 57 injuries over the same period. These reports include the tacit knowledge of customers and emergency services.
- U.S. House Committee hearing and Akio Toyoda apology. In the wake of the 2009 and 2010 recalls, the U.S. House Committee on Oversight and Government Reform held a hearing10 at which Akio Toyoda, President and CEO of the Toyota Motor Corporation, gave testimony11 including a widely reported public apology12 for the accidents and recalls.
- Commitment to tacit knowledge engagement. Akio Toyoda’s testimony included the commitment that “reflecting on the issues today, what we lacked was the customers’ perspective. To make improvements on this … we will devise a system in which customers’ voices around the world will reach our management in a timely manner.”
- Criminal charges and $1.3 billion settlement. However, in March 2014, the U.S. Department of Justice announces a criminal charge13 against Toyota Motor Corporation, resulting in Toyota agreeing to pay a record USD $1.3 billion settlement14 for misleading American consumers. The charges related to how in 2009 Toyota had claimed that floor mats were the cause of the sudden unintended acceleration, while at the same time hiding another problem.
- Misleading statements. In announcing the criminal charge against Toyota, U.S. Attorney General Eric Holder stated that “Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress.”
- Tacit knowledge holders threatened with legal action. Raising a different issue in a different country, the Australian owners of a number of Toyota vehicle models started to report problems with faulty diesel particulate filters (DPFs) as early as 201715. After receiving numerous reports, a repair garage began to discuss the problems on their Facebook page. However, rather than respond to customers’ tacit knowledge as Akio Toyoda had committed to do, Toyota’s response was to threaten the garage16 with a Supreme Court injunction.
- Class action and judgement. On behalf of affected owners, a law firm subsequently initiated a class action17 against Toyota in the Federal Court of Australia. The Federal Court of Australia judgement18 included that the relevant vehicles “were not of acceptable quality at the time they were initially supplied because they were fitted with a defective diesel particulate filter (DPF) system [and] … Toyota engaged in misleading or deceptive conduct in connection with marketing and selling the Relevant Vehicles.” As a result of the judgement, Toyota could end up paying more than $2 billion to customers19.
- Repeated failure. This 2022 Federal Court of Australia judgement aligns with the 2014 judgement by the U.S. Department of Justice summarized above. In both cases, Toyota failed to listen to and respond to the tacit knowledge of customers, instead engaging in what is defined as “knowledge hiding.”20 These actions are the antithesis of effective knowledge management (KM).
- Read more: RealKM Magazine Heart of the problems with Boeing, Takata, & Toyota 5-part series.
Case study 2, tacit knowledge success – Xiaomi
- Tacit knowledge engagement. As reported in the following video, Chinese electronics maker Xiaomi engages directly with its customer support base to listen to and directly respond to the issues this large and growing community21 identifies. Because Xiaomi directly and positively engages the tacit knowledge of customers, problems and potential solutions are quickly identified and addressed, and the community’s tacit knowledge helps to drive innovation.
- Read more. RealKM Magazine research summary22.
Case study 3, potential tacit knowledge success – BMW
- Recalls. Just like Toyota, European car maker BMW has needed to undertake numerous recalls, for example, over 720,000 vehicles23 in the U.S. in August 2024.
- Tacit knowledge engagement. However, in contrast to the behavior of Toyota documented above, BMW Korea has announced24 a new Xiaomi-style initiative. The BMW Voice of Customer (VoC) Analyzer classifies and analyzes the tacit knowledge collected by the customer center using artificial intelligence (AI) and provides it in the form of a web page, allowing all employees of BMW Group Korea to easily check customer opinions and trends in major issues. OpenAI’s GPT-4o and GPT-4o mini are used for the analysis. BMW Group Korea plans to introduce this system to communication centers to quickly and accurately check customer opinions and complaints, seek solutions, and proactively improve customer service.
Header image source: Mike McBey on Flickr, CC BY 2.0.
References:
- Polanyi, M. (1962). Personal Knowledge: Towards a Post-Critical Philosophy (second edition). University of Chicago Press. ↩
- Polanyi, M. (1966). The Tacit Dimension. London and New York: Routledge and Doubleday and Company. ↩
- Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge Creation. Organization Science, 5(1), 14~37. ↩
- French, S. (2024, September 20). RoundTable Panel on AI and Tacit Knowledge (video). Delta Knowledge. ↩
- Wikipedia, CC BY-SA 4.0. ↩
- Eisenstein, P. A. (2018, February 2). Recall Costs Topping $20B Annually as Safety Defects Grow. The Detroit Bureau. ↩
- BizzyCar. (2024, December 31). Automotive Recall Alert: Over 27.7 Million Vehicles Affected in 2024! BizzyCar. ↩
- McPhillips, D., & Choi, A. (2025, February 18). Food recalls in the US were more widespread – and deadly – in 2024. CNN. ↩
- The Associated Press. (2010, May 25). Toyota “Unintended Acceleration” Has Killed 89. CBS News. ↩
- House Committee on Oversight and Government Reform. (2010, February 24). Full Committee Hearing:Toyota Gas Pedals: Is the Public At Risk? ↩
- Toyoda, A. (2010, February 24). Prepared Testimony of Akio Toyoda, President, Toyota Motor Corporation Committee on Oversight and Government Reform. ↩
- Agencies. (2010, February 24). Toyota CEO apologizes for recall, accidents. The Economic Times. ↩
- U.S. Department of Justice. (2014, March 19). Justice Department Announces Criminal Charge Against Toyota Motor Corporation and Deferred Prosecution Agreement with $1.2 Billion Financial Penalty. ↩
- Cowan, J. (2014, March 20). Toyota to pay $1.3 billion for deadly defect cover-up. ABC News. ↩
- Smith, G. (2017, February 17). Diesel Particulate Filter clogging in HiLux, Prado and Fortuner? CarsGuide. ↩
- Cadogan, J. (2018, March 27). Feel The Burn DPF! AutoExpert. ↩
- Bannister Law. (2020, July 20). Toyota DPF Class Action. ↩
- Federal Court of Australia. (2025, February 10). This is an important notice issued to you by the Federal Court of Australia regarding a
class action relating to certain Toyota Hilux, Prado and Fortuner diesel vehicles. ↩ - Bainbridge, A. (2022, April 7). Toyota could pay more than $2 billion to customers in class action over faulty DPFs. ABC News. ↩
- Ruparel, N., & Choubisa, R. (2020). Knowledge hiding in organizations: A retrospective narrative review and the way forward. Dynamic Relationships Management Journal, 9(1), 5‐22. ↩
- Xiaomi. (n.d.). Xiaomi Community. ↩
- Ortiz, J., Ren, H., Li, K., and Zhang, A. (2019). Construction of Open Innovation Ecology on the Internet: A Case Study of Xiaomi (China) Using Institutional Logic. Sustainability, 11(11): 3225. ↩
- Forbes, A. (2024, August 21). BMW recalls over 720,000 vehicles due to water pump malfunction that may cause a fire. USA Today. ↩
- Chung, J. (2024, December 26). BMW 그룹 코리아, ‘웍스컴바인’과 협력하여 AI 기반 고객 의견 분석 시스템 도입. BMW Group PressClub Korea. ↩
