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Without the ready exchange* of information, knowledge cannot be created, decisions cannot be made.  Without knowledge, innovations cannot be adopted.

The interconversion of tacit and explicit information provides the social interactions required for creating knowledge. Studying a cook, writing a recipe, creating a menu, and practicing a technique are all examples of interconversion of tacit and explicit information. Each of those steps also requires interactions with others in order to proceed. Thus knowledge is created and innovations are adopted only through a web of social interactions.

Explicit information – available for all to see. Explicit information can be expressed in words and numbers, can be easily communicated and shared in the form of hard data, codified procedures or universal principles. This is the hard information that we store in databases. It is the information of machines.

Tacit information – held inside our heads. Tacit information is highly personal and hard to formalize. Subjective insights, intuitions and hunches fall into this category. This is the soft information that we store in our heads. It is the information of people.

Conversion between these two forms of information by the interaction of human beings creates new knowledge, the ability to take an action. There are four possible processes on the path to knowledge creation:

• Tacit-to-tacit (socialization) – the direct exposure, testing and acquisition of information between individuals. Watch someone.
• Tacit-to-explicit (conversation) – the articulation of personal information into defined, decision-producing form. Write something.
• Explicit-to-explicit (combination) – the juxtaposition of diverse pieces of information to produce new knowledge. Analyze results.
• Explicit-to-tacit (internalization) – the subjective process of making new information one’s own. Memorize something.

Organizations that do not permit the easy conversion of information will create less knowledge and adopt fewer innovations. This is often seen by the inability of organizations to convert tacit information into forms usable by all. Some groups punish socialization and conversation in the community.

Wisdom can never be attained without the rapid flow of information in a community.

* This model has been adapted from the work of Nonaka and Takeuchi.