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Knowledge Management Models 69

information about the buyers. Their intent was to use this information to plan
new models to sell, new combinations of products, of products and service, of
service, and so on. The POS system collects and analyzes information and then
helps marketing people plan information-intensive marketing programs called
“ micro-merchandising. ”
Finally, the last conversion process, internalization (explicit-to-tacit) occurs through
the diffusion and embedding of newly acquired behavior and newly understood or
revised mental models. Internalization is very strongly linked to “ learning by doing. ”
Internalization converts or integrates shared and/or individual experiences and knowl-
edge into individual mental models. Once new knowledge has been internalized, it is
then used by employees who broaden it, extend it, and reframe it within their own
existing tacit knowledge bases. They understand, learn, and buy into the new knowl-
edge and this is manifest as an observable change, that is, they now do their jobs and
tasks differently.
For example, General Electric has developed a system of documenting all customer
complaints and inquiries in a database that can be accessed by all its employees. This
system allows the employees to fi nd answers to new customers ’ questions much more
quickly because it facilitates the sharing of employees ’ experiences in problem solving.
This system helps the workers to internalize others ’ experiences in answering ques-
tions and solving problems.
Knowledge, experiences, best practices, lessons learned, and so on go through the
conversion processes of socialization, externalization, and combination. It is crucial
that knowledge is not halted at any one of these stages. The reason is that it is only
when knowledge is internalized into individuals ’ tacit knowledge bases in the form
of shared mental models or technical know-how that this knowledge becomes a valu-
able asset — to the individual, to their community of practice, and to the organization.
In order for organizational knowledge creation to take place, however, the entire
conversion process has to begin all over again: the tacit knowledge accumulated at
the individual level needs to be brought into contact with other organizational
members, thereby starting a new spiral of knowledge creation ( Nonaka and Takeuchi
1995 , 69). When experiences and information are transferred through observation,
imitation, and practice, then we are back in the socialization quadrant. This knowledge
is then formalized and converted into explicit knowledge, through the use of analogy,
metaphor, and model, in the externalization quadrant. This explicit knowledge is then
systemized and recombined in the combination quadrant — whereupon it once again
becomes part of individuals ’ experience. In the internalization quadrant, knowledge
has once again thus become tacit knowledge.