The Tacit Knowledge Trap

The future calls for more of our innate and creative capabilities.

Jack Dorsey cut 40% of Block’s workforce and pointed at AI. Amazon, UPS, General Motors, Google. The list keeps growing. And the research is starting to confirm what a lot of experienced leaders are quietly sensing. Everything is changing.

If you’ve spent the last few weeks trying to figure out what to think about all of this, you’re not alone. And you’re not confused because you’re behind. You’re confused because most of what’s being written right now isn’t actually written for you, it’s written to influence how you think about AI.

The Data Gets It Half Right

The Dallas Fed published research this month that cuts through a lot of noise. Their finding is that AI is replacing workers whose knowledge is codifiable, the kind you can find in a textbook, a manual, or a training course. It’s automating entry-level roles and the routine layers of mid-level ones. At the same time, wages are actually rising for workers whose knowledge is tacit, the kind you can only earn through experience.

This distinction matters. Codifiable knowledge is the kind AI is very good at. Feed it enough data and it will pass the bar exam, write your financial model, review your contracts, generate your marketing copy. It already does all of these things.

Tacit knowledge is different. It’s the knowledge that lives in your hands, your gut, your pattern recognition. The therapist who can read a room. The executive who knows a merger is in trouble three months before the numbers say so. The project lead who understands which team member is the actual risk, not because anyone told them, but because they’ve seen this before.

So the conventional wisdom forming right now is that if you have deep tacit knowledge, you’re okay.

We think that’s true. And incomplete.

The Trap Inside the Truth

Here’s what the data doesn’t say. And what very few people are willing to name out loud.

Tacit knowledge is not the same thing as the capability to get new things done.

You can have twenty-five years of experience and still be running the same pattern on repeat. You can be the most seasoned person in the room and still be asking yesterday’s questions. Tenure is not a proxy for adaptability. Experience is not a proxy for the ability to work at the edge of the unknown.

Think of it this way.

A master chess player has extraordinary tacit knowledge. They’ve internalized thousands of patterns, positions, openings, endgames. Their knowledge cannot be put in a manual. It took decades to develop. And yet AI beat the best chess player on the planet in 1997. Not because the grandmaster lacked experience. Because chess, for all its complexity, is a closed system with rules that don’t change.

The organizations we work with aren’t chess boards. They’re open systems, messy, contradictory, politically charged, and changing faster than any previous experience fully prepares you for. The rules aren’t fixed. The pieces move in directions that weren’t in the playbook.

Tacit knowledge helps. It’s necessary. But it is not sufficient.

1%er Thinking

In our research across more than eleven million innovation case studies, we kept finding a small population of people who consistently got new things done. Not because they were smarter, or more experienced, or more credentialed than everyone else in the room. The pattern that distinguished them was something different.

We call them 1%ers. Not because they’re rare in the way diamonds are rare. But because in any given initiative, the people who actually carry it across the finish line tend to be a very small fraction of the total population involved.

What distinguishes 1%er thinking from tacit knowledge is that it isn’t primarily about what you know. It’s about how you process what you know and look for what you don’t know. Specifically, three capabilities that operate together:

Compass. The ability to hold a clear direction, a true north, even when the environment is contradicting it. Not stubbornness. Orientation. The 1%er knows what better looks like and doesn’t lose sight of it when things get complicated.

Complexity. The ability to see systems, not just symptoms. To map how things are connected, not just what’s presenting. Most experienced leaders have seen enough to recognize patterns, but the 1%er can also see when the pattern itself has changed.

Contradiction. This is the one that separates the most. Where most people make trade-offs, accepting a worse outcome in exchange for avoiding a worse problem, the 1%er looks for the solution that dissolves the contradiction entirely. AI can identify contradictions. It cannot solve them. That remains a human capability. And a rare one.

Two Maps, One Territory

Imagine two people who both know a city deeply. The first has lived there for thirty years. They know which streets flood in spring, which restaurants are actually good, which neighborhoods to avoid at night. Extraordinary tacit knowledge. The second person has that same knowledge, and one more thing. They can look at the city as a system. They see how traffic patterns are shaped by zoning decisions made in 1987. They understand why the flooding happens and what it would take to actually solve it. They know how to read a map that doesn’t exist yet.

Both people know the city. Only one of them can redesign it.

That second person is thinking like a 1%er. Their experience is the foundation. But the capability on top of it, systems thinking, orientation toward value, the ability to resolve rather than trade off, that’s what the moment actually requires.

This Is a Capability, Not a Credential

The most important thing to understand about 1%er thinking is that it isn’t a personality type or something you either have or don’t.

It’s a capability set. Which means it can be developed. It can be recognized. It can be deliberately built in individuals and in teams.

For the experienced leader sitting with genuine uncertainty right now, not panicking, not dismissing, just trying to figure out what’s actually true right now….

Your tacit knowledge is real. It is valuable. And AI is not going to replicate it in the near term.

But the question isn’t is my experience still worth something? It’s am I using my experience to get to the edge, or am I staying inside what I already know?

That’s the difference.

Shana Finnegan is Principal and CEO of RITE Advisory and co-author of The 1%ers: How New Things Get Done. The 1%er framework is built on analysis of more than eleven million innovation case studies with co-author and innovation scientist Darrell Mann.

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