Knowledge Exploitation and Knowledge Exploration:
Two Strategies for Knowledge Creating Companies

Kazuo Ichijo

Graduate School of Interational Corporate Strategy
Hitotsubashi University

Abstract

A company must enhance its intellectual capital by executing both knowledge exploitation and knowledge exploration thoroughly. Organizational learning is very important and knowledge exploitation can be used for that purpose. However, the important fact about knowledge is that knowledge is both explicit and tacit. Some knowledge can be put on paper, formulated in sentences, or captured in drawings. Yet other kinds of knowledge are tied to the senses, skills in bodily movement, individual perception, physical experiences, rules of thumb, and intuition. Such tacit knowledge is often very difficult to describe to others , and therefore, is not obtainable only by the exploitation strategy. By means of knowledge exploitation, it is not easy to acquire tacit knowledge. It might be either impossible or cost-inefficient and time-consuming to obtain tacit knowledge by the exploitation strategy.

While the idea of tacit knowledge makes sense intuitively to most people, managers often have a hard time coming to grips with it on a practical level. Recognizing the value of tacit knowledge and figuring out how to use it is the key challenge for a company operating in the current knowledge-based society. Executing knowledge exploration means valuing tacit knowledge and pursuing innovation by consistently and systematically executing "tacit-explicit conversion", that is, making tacit knowledge explicit, and sharing explicit knowledge among organizational members.

To appear in "Strategic Management of Intellectual Capital and Organizational Knowledge" edited by Nick Bontis & Chun Wei Choo (Oxford University Press).