Companies Can Benefit from Taming Tacit Interactions

Ann All

If there's one thing that IT loves, it's automating processes, in the aim of boosting efficiency and cutting costs. But what about the processes that aren't easily automated?


McKinsey & Co. coined the term "tacit interactions" to describe these kinds of processes, notes JargonSpy columnist Dan Woods in Forbes. Some notable examples: negotiating a deal, authoring a blog (a task near and dear to my heart) and selling a product. Such interactions typically involve collecting information from a variety of sources and are rarely completed the same way twice.


Tacit interactions account for a large chunk of business processes, writes Woods. He cites McKinsey's findings that some 41 percent of processes were tacit interactions in 2000 but today account for 70 percent of newly created jobs. (Wonder if the growth of Web 2.0-type collaboration, which is often light on structure, accounts for at least some of this increase?) Not only that, but industries with especially large numbers of tacit interactions see a much larger performance gap between star employees and their more average counterparts, highlighting the importance of process improvement.


Many companies are already aware of this, as evidenced by trends such as the convergence of CRM, which tends to be filled with tacit interactions, and business process management (BPM), which I wrote about in September.


Woods highlights three approaches to reaping bigger benefits from tacit interactions:

  • Scrum, a form of Agile software development that has moved beyond development to be used for other business projects. The key, writes Woods, "seems to flow from improving communication and letting the right way to work emerge from the team." A challenge of Scrum, or any Agile methodology for that matter, is its emphasis on flexibility, a concept with which many organizations struggle, as I wrote earlier this year.
  • An approach to wikis developed by Socialtext "which accelerates the formation of teams, the flow of information in a team and the pace of tacit interactions," writes Woods. Wikis can offer obvious value for organizations, as IT Business Edge blogger Rob Enderle illustrates in his post on a product development project at EMC that made good use of wikis and other Web 2.0 collaboration tools and, not coincidentally, didn't adhere to EMC's usual project management processes.
  • A new product from startup ActionBase that "combines a wiki-like document structure with a simple way of modeling and managing tasks through Outlook and Word," writes Woods. IT Business Edge associate editor Lora Bentley spoke with the company's CTO earlier this month and was similarly impressed with its approach. In particular, she noted its ability to aid compliance efforts -- another shortcoming of tacit interactions -- by making such interactions more transparent.

Woods suggests that companies can benefit even if they don't adopt these approaches, simply by finding inspiration in some of their key principles, such as flexibility and transparency.

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Dec 6, 2008 1:45 PM Kris Kris  says:
Tacit Interactions?!? Are you kidding me?Did we really need a study from McKinsey (not to mention yet another goofy consultant terminology) to realize that as ERP has matured, the cycle time required to process transactions would shrink? And wouldn't it just make common sense that what is left is the activity that occurs "between the transactions" and would end up representing a greater percentage of the whole than pre-ERP? Yes, "Between the transactions" activities would be that "tacit interaction" term these geniuses coined that no one would understand and would feel compelled to call in a McKinsey-like organization to explain it to them. Here's a thought - tell collaboration-dependent work teams that, now that they've shrunken 'transaction processing' time, it is time to cut the time between the transactions by half. Then tell them that there are some web 2.0 tools out there to use if it will help. Make their continued employment dependent on succeeding - they'll figure it out. It kills me how lame company management has become these days and how willing these companies are to buy the smoke and mirrors the McKinseys of the world are selling. Reply
Dec 7, 2008 10:28 AM Terry Schurter Terry Schurter  says:
Ann,Thanks for bringing this to our attention, it helps people understand what others are doing when they talk about improving "processes." Over the last 5 years the majority of people who have jumped on the process/BPM/ECM bandwagon are doing just as you note - automating "processes."So with this difference noted as "Tacit interactions" we have a line of demarcation (and I agree with the comment about not needing goofy terminology) that tells us that some processes aren't good automation targets.Well in reality, MOST processes are NOT good automation targets. The line is effectively human interaction, and where people interact with a process on a regular basis the results from process automation have rarely stood up to any qualitative ROI analysis.Why? It's the difference between perspectives. The technology approach to process "improvement" is at marked odds with the perspective and reality of people getting work done. Human interactions are the essence of the critical business processes in every organization and you cannot significantly improve them through the use of technology. Improving human-centric business processes is a business activity performed by people and technology is at best, and only sometimes, a component of any improvement plans that result.For back-end processes and IT processes, process automation makes sense. After that it all depends on the perspective and approach by the people leading an improvement activity (with or without technology, as there are a number of smaller technology players that do blend the business/technology disciplines in their approach)."Tacit interacti0ns" are only a tiny piece of the process pie that is rarely served effectively by the process automation approach.Terry SchurterDirector International Process and Performance Institutewww.ipapi.org Reply
Dec 10, 2008 10:17 AM Brian McNeill Brian McNeill  says:
I haven't read the McKinsey report, but the way you've positioned it, tacit-knowledge is a bad thing. That's simply not the case. I believe that Professor Nonaka, author of "The knowledge-creating company," had it right. Knowledge is created by individuals interacting closely, each bring his or her experience to bear on a shared situation. Web 2.0 collaborative tools can reduce the effect of working apart in time and distance, but adding too much structure is a bad thing. Gee, what would have happened if Google had been borne of a company requiring waterfall style documentation of requirements? That would have added rigor, but at incalculable opportunity cost. Reply
Dec 10, 2008 2:00 PM Michael Deutch Michael Deutch  says:
Hi Ann, Millions are turning to applications like MindManager from Mindjet to 'map' their way through complex issues, projects and 'tacit' interactions. The most common uses of mindmapping software includes meeting management (planning, facilitating and follow up), visualizing and solving complex problems, brainstorming and ideation. The results? Greater clarity, insight and team alignment. While ERPs and the like tackle operational transactions, companies like Mindjet help knowledge workers with the thinking and analysis to make better decisions. Reply
Dec 23, 2008 11:14 AM Process Automation Process Automation  says:
It is rightly said by Terry Why? It's the difference between perspectives. The technology approach to process 'improvement' is at marked odds with the perspective and reality of people getting work done. Reply
Jan 12, 2009 9:31 AM Newfoundland Business Directory Newfoundland Business Directory  says:
Knowledge & Collaboration are becoming commonplace in business right now. I'm not sure if I agree with some things in this article. Reply
Sep 20, 2010 5:07 PM Search Engine Search Engine  says:

Thank you for quality detailed posts in here.  The collection of such a wide range of writings and practical ideas for those serious about living differently is so helpful! I cannot wait to read and explore more.


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