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Peter Burgess

The Death of Wisdom: Why Our Companies Have Lost It–and How They Can Get It Back Home Author’s Credentials Budget 2013 Growth, how? Inside the world of… Q and A’s RSS Feed 2014 in review Leave a comment STOP PRESS for http://biggernumbers.wordpress.com/….

Yet another milestone reached. You’ve now topped 2,700 visits to this blog, thanks to members of the groups engaged with experiential learning, KM, decision-making, HR, and IT. This inspiring tally surely helps to confirm that corporate amnesia is truly the invisible hand of an unintended consequence that is knocking the stuffing out of our productivity, ROI and wealth. Curing the Alzheimer effect What http://biggernumbers.wordpress.com/ shows is how, no thanks to the short tenure workplace, we’re giving ourselves the business equivalent of Alzheimers – when employers, literally, lose their memory. To solve the problem, organizations need to efficiently capture their valuable institution-specific knowledge before it walks out of the front door and then know best how to re-apply it to the ever-changing circumstances of today and tomorrow’s workplace. It’s a precise skill that, surprisingly, is still untaught, leaving many business decisions to other employers’ experience and little more than intuition, untested judgment, political expediency, subjective thinking, experimentation and delay. Learning how to learn using a new employer’s tried-and-tested practice, whether it was successful or unsuccessful, is a way of not having to expensively reinvent the wheel every time a replacement walks into your swing doors. Posted January 6, 2013 by waytoogo in Uncategorized Over The Horizon 1 comment

This article is a summary of the opening chapter of Arnold Kransdorff’s groundbreaking new book entitled “The Death of Wisdom: Why our companies have lost it – and how they can get it back”. Published by Business Expert Press of New York, eBook and hard copies are available from click here.

THE RACE WHERE EVERY SPRINTER DROPS THE BATON

When the London Olympics was staged in July/August, 2012, bosses all over the world will have had the opportunity to see an aspect of management they themselves neglect in the way they make, and are taught to make, their decisions, writes Arnold Kransdorff. Over much of the 64-year period since the event was first staged in Great Britain’s capital, athletes were using a technique that enabled them to achieve performances way beyond administrators in industry and commerce. While athletes’ attainments have consistently improved since the late 1940s – in fact the progression in their scores has never been faster in all history – managers in OECD countries have presided over declining rates of both productivity and productivity growth over most of the same period (see Figure 1 left). The discomforting paradox of the timeframe is that the athletes’ measure is only slightly longer than the availability of widespread business education.

Alongside superior diets and full-time training schedules, the athletes were using a technique called Experiential Learning, self evidently learning from experience, in their case via the medium of movie film and video of their own and others’ performances. Through the recorded evidence of prior practice, they had been applying their own and others’ knowledge and experience, out of which has been extracted the so-called ’wisdom’ needed to create new knowledge that addresses new circumstances. In contrast, managers in industry and commerce have been largely short changing the wider concept when it comes to how they make their employer’s determinations; in fact, organizations have been consciously and energetically pursuing a workplace practice that is actually discarding their own acquired wisdom. The institutions aside, the culpable party is the much-vaunted flexible labor market, otherwise known by its outcome – short jobs tenure.

It is around this phenomenon, its consequential effect of imposing widespread workplace discontinuity, corporate amnesia and the process by which wisdom is classically acquired that there is much misunderstanding, even of the difference between knowledge and wisdom.

Wisdom is an obscure quality, often equated with intelligence, being smart, gifted, being intellectual and/or scholarly. Yet its manifestation is not necessarily dependent on any of these attributes. It has a special property – good judgment, a feature that probably explains the business success of so many of the unschooled. And because judgement of any sort cannot be arrived at in isolation, a necessary component of the journey is knowledge and actual experience, both one’s own and others’. In the world of business, and because it is the most relevant, this includes – crucially – the employer’s knowledge and experience. It is the soundness of an action or decision that defines this rare quality and on which depends most progress.

To fully understand wisdom’s nature, it is necessary to comprehend the precise character of all the components of this terminological marathon. By way of illustration, the announcement of a company’s annual results, on its own, is data while a comparative relationship with, say, a previous performance figure becomes information.

In contrast knowledge is interpretative and predictive, its deductive character allowing its owner to understand the implications of data and information and act accordingly, the action becoming experience. Knowledge is variously described by Alvin Goldmanas justified true belief, by Bruce Auneas information in context, by Verna Alee as experience or information that can be communicated or shared and by Karl Wiig as a body of understanding and insights for interpreting and managing the world around us.

A separate and transformative task, the component that adds value to knowledge and experience is wisdom. Without it, the action – i.e. the ensuing decision – becomes no more than repetition in a new time frame. In fresh contexts, where circumstances are always different, triumphs can easily be forfeit. What is evident, then, is that the continuing ability to acquire wisdom is a required element for survival in a competitive world and an equally obvious component in the way managers are taught how to learn to make good and better decisions.

In oblivion

The confusions that often arise around these clarifications are various, one of the biggest being the muddle between the nature of the acquired wisdom of individual employees and the organizations for which they work. In truth, the wisdoms are separate, interconnected and reliant on each other’s unique physiognomies. Without each other – for example when the employee moves on – both become disassociated. And while employees can theoretically passage their ‘memory’, however remembered, to a new employer, the source organisation is typically left in oblivion. Where understandings fall down is when employers mistakenly believe that the imported experiences of replaced individuals – even high achievers – substitute for an organisation’s already tried-and-tested experience. To be effective, imported experiences still have to be adapted to a new employer.

Non-interchangeability of experience can also be seen in the example of a taxis driver, whose basic skill is driving. Driving, though, is not universally applicable, for a New York taxis driver will have to learn another type of driving – left-side driving – to earn a living in the U.K. Equally, the additional street and traffic knowledge that makes the New York taxis driver a better New York taxis driver is quite irrelevant in London. The logic is deafening. One decision-maker, however good in one situation, is not necessarily of the same quality in another, however similar is the occupation. Decision making is environment specific.

Elsewhere, among those who acknowledge that circumstances DO always change, there are those who believe that an organisation’s prior experience is of little or no use – despite businesses visibly acknowledging the contrary by paying more for experienced employees. According to typical argument, prior experience is little more than dry ‘history’, a discipline with no sticky connection between yesterday, today and tomorrow. With those who have moved on from this paradigm, some believe it is only short-term experience that is important. Because of its contemporaneous nature, it may have an edge, but knowledge is not time-specific when it comes to the art of good management and decision making. Elsewhere, many businesses consider that it is only their mistakes that warrant educative attention; in truth, successes can also be improved upon. Then there is the naïve belief that one or two retained old timers are sufficient for the recall of all experiences. Knowledge – yet others imagine – is, anyway, embedded in their expensively constructed data banks, in which is recorded the company’s written records. However useful and necessary to good decision making is the provision of generic data and information, the contents are usually passive and, as a physical or digital resource, widely unheeded anyway. Excluded is the type of knowledge central to the acquisition of wisdom.

The explicit and the tacit

By way of further explanation, knowledge is made up of an explicit component, sometimes called skilled knowledge, and tacit or cognitive knowledge, also known as ‘coping skills’. The former is the type of knowledge such as the professional or vocational skills that are recorded in the abundant manuals and textbooks and offered up in training courses, what this author calls the ‘what’ of know-how. Tacit knowledge on the other hand is the non-technical ‘how’ of getting things done, what has been called ‘operacy’ or “techne” (the Greek for ‘skill’) and what this author calls the ‘how’ of know-how. Much of it is implicit, ambiguous and certainly esoteric, and acquired largely by experience that is functional and, in its most instructive forms, context-, co-worker- and institution-specific. Typically existing in the minds of individuals, it is normally very difficult to capture. But it is through tacit knowledge that most erudition takes place, where old knowledge is transformed into new knowledge with the added value variously called hindsight, insight, 20:20 vision, good judgement, enlightenment, having the quality of being sensible and – the holy grail – wisdom. At this point it is instructive to point out the differing perceptions towards knowledge in general. The broad belief in the West is that it is mostly technological and/or quantitative in orientation. Western rationalism is based on the theory that knowledge comes through deductive reasoning while Eastern empiricism reasons that erudition is derived inductively through actual experience. As Experiential Learning specialists Professors Nonaka and Hirotaka Tekeuchi confirm, managers in Western economies generally focus on technically-orientated, mainly explicit information encompassing rules, processes and the professional/vocational information codified in manuals and texts, while the emphasis in Japanese companies, for example, is on the more implicit and ambiguous tacit knowledge, a characteristic that is deeply rooted in action as well as ideals, values and emotions. It is part of their Zen Buddhist heritage and culturally helps in the Japanese way of change. In the world of decision making, the difference – in exactly the same way as many managers mistake information management for knowledge management – is as subtle as it is important. An essential part of the evolutionary process of applying prior experience to new circumstances (in Nonaka and Tekeuchi’s words “turning old knowledge into new knowledge”), tacit’s importance is barely acknowledged by Western managers. Few will even know how to define it, let alone show any concern when it walks out of the front door. For the acquisition of wisdom and good decision making, the academic label for the journey is experiential learning, a discipline which – surprisingly – is also short changed when it comes to teaching managers how to better make their employer’s determinations. MBA teaching is not exempt, despite an apparent scholastic belief in the model’s utility. Conventional business instruction is largely a one-size-fits-all education that is designed to provide generalized skills within specific fields such as finance, marketing, strategy, and leadership. Formal business education tries to accommodate their own interpretation of Experiential Learning through mediums such as universal case studies while employers use stratagems such as apprenticeships, induction and – at management level – storytelling. Other more sophisticated attempts at keeping pace with innovation and workplace adaptation include disciplines such as Action Learning and Change Management. Using outdoor pursuits such as climbing, snow-shoeing, white-water rafting and dog sledging, some practitioners also put Team Building under the umbrella of Experiential Learning. Enter the flexible labor market While these approaches go some way to accommodate the narrower interpretation of Experiential Learning, employers and educators still largely overlook a bundle of related and new issues that compromise established learning strategies, of which the above-mentioned are just a few. The overriding oversight – the flexible labor market – is the much-prized development of modern business with a long-term outcome that seriously devalues the short-term benefits, explained as follows. In the first 30-odd years between the two London Olympiads – i.e. the immediate post-WW2 years – most employees could expect to have one or two, and if they were really unlucky three, employers in their working lifetimes. With personnel across the workforce – including managers – now having an average eight different paymasters in many countries, employee tenure is around five years, effectively up to 20% shorter if one takes into account lower-output induction periods, notice times and intervals of unemployment. While the commonplace high rate of jobs churn undoubtedly enables employers to more quickly adjust to changing circumstances, there is a hidden downside – high workplace disruption and a low level of institutional memory exacerbated by individuals’ inherent short, selective and defensive recall abilities. This, in turn, hides a misjudged consequence for employers – the phenomenon of corporate amnesia, which manifests itself in the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter modern industry and commerce. To continue the Olympic metaphor, it is the business equivalent of the relay race, where each sprinter drops the baton. To further emphasize the potentially devastating impact of migrating employees, academics have estimated that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads. Simply stated, the recently departed means that, for employers, most of their special knowledge and related wisdom goes walkabout, never thereafter available for use by its instigator. This diminishes the effectiveness of prevailing learning strategies, which mostly only have recent experiences to work with. No inheritance The fact that that there is often some experiential overlap in the high churn rate is providential but it is still reasonable to conclude that, at any one time since the flexible labour market started in earnest in the 1980s, employers have had access to declining levels of medium- and long-term memory of their own making. For every successive generation of employees since then – around seven in many countries – the organization’s previous short-term memory will have disappeared, leaving no establishment with any employer inheritance to speak of. With only one generation’s short-term memory to work with – the contemporary one – is it any wonder that the corporate beneficiaries of short tenure have a legacy of short-termism? And why, these days, can one decade’s sector leader very, very easily be another decade’s laggard. And, for employers, there’s the trillion-pound question for academics to study using Thomas Malthus and David Ricardo’s law of diminishing returns in mind: is lots of second-hand experience really better without much accrued organizational-specific wisdom? What has happened is that employers have removed themselves from much of the more relevant and, arguably, the most important form of practice from which to learn – their institution-specific experience that, otherwise, could be shared with resident employees. By institution-specific experience this text is referring to organizations’ own tried and tested experience, what this author has designate as their Organizational Memory (OM) and which allows them to build on their already tested successes and failures. The precise raison d’être for this is that every organization is unique to itself and that most progress is organic. To put all this into an educational and corporate context, blue-collar skills are generally predicated on available explicit knowledge while white-collar administrative skills are grounded in the less-than-visible tacit knowledge. Explicit knowledge can be taught but tacit knowledge is best learned. For business-type decision making, the distinction is palpable. Teaching is instruction received while learning is instruction acquired out of an abstracted process of critical reflection, reasoned deduction, and applied action, the evidential base for which is OM. Truly, for employers to expect decisions to be made without reference to OM and, specifically, their tacit knowledge is – to use more athletic imagery – hamstringing management. More simply stated, without the better management of homegrown OM, the best that institutions can do is learn from the outside experiences of replaced employees, another of the professed values of the flexible labor market. While this undoubtedly gives organizations access to new blood, new enthusiasm and new experiences, this always depends on the replacement individuals’ worth; it should be noted, however, that others’ experiences are not always relevant, remembered accurately, truthful, or even transferable. This poor interchangeable value of experience has been supported by three Harvard Business School academics. The consequential lost productivity is enormous, a picture that can be drawn from the already-mentioned declining rates of per capita productivity growth in OECD countries since the 1950s (see Figure 1) when, bizarrely, business education has never been more accessible. And while it is difficult to apportion any shortfall solely to poor decision making from corporate amnesia, a further indication of the extent of the problem is one big management consultancy’s estimate of the broad cost of wasted productivity in several major OECD countries – between 5.9% and 9.7% of their GDP (see Table 1 below). . So, no thanks to the flexible labor market, industry and commerce have become exclusively dependent on the skills and experience, however remembered, of their short-tenure employees. Employers have elected to disregard much of the other available source of wisdom, their own experiences that, because they are already tried and tested in its own environment, are infinitely more valuable. The picture is even more graphic if one likens most prior experience in the context of the flexible labor market to the immortal words of John Clees in his dead parrot sketch: “E’s not pinin’! ‘E’s passed on! This parrot is no more! He has ceased to be! ‘E’s expired and gone to meet ‘is maker! ‘E’s a stiff! Bereft of life, ‘e rests in peace! ‘Is metabolic processes are now ‘istory! ‘E’s off the twig! ‘E’s kicked the bucket, ‘e’s shuffled off ‘is mortal coil, run down the curtain and joined the bleedin’ choir invisible!! This is an ex-parrot!!!!” So much for institutional experience and its embedded wisdom! To quote timeworn and more relevant independent understandings of whether or not to address this new workplace issue, consider the illustrative dialogue in English novelist J. L. Carr’s 1972 book Harpole Report: “You have not had thirty years’ experience. You have had one year’s experience 30 times.” Alternatively, ponder what Professor Robert Hayes, ex-IBM and McKinsey, told a Harvard Business School audience in 1984: “In the pure and physical sciences, each generation inherits the conquests made by its predecessors. But in the moral sciences, particularly the art of administration, the ground never seems to be incontestably won”. Finally, consider the advice of J. G. Pleasants, a former vice president of Procter & Gamble: “No company can afford the luxury of rediscovering its own prior knowledge. Understanding the company’s past can lead to adapting previous successes, avoiding old mistakes and gaining knowledge far beyond personal experience.” Significantly, all were conveyed before flexible working was such a large entry in the corporate lexicon. Everyone has some wisdom In this author’s own experience, there are few conscientious employees, and especially retirees – from senior managers downward – who do not have any important and/or relevant institutional wisdom to impart. Alongside most ranks of employee, one of the most prolific individuals was the departing departmental secretary of a large pharmaceutical company. So, how can organizations’ nomadic wisdom be rescued and/or taught? To be able to take full advantage of their prior experience – and the flexible labor market – employers need to be able to continually work with their short-term memory as well as the memory beyond the average four/five years of experience to which commerce and industry have sentenced themselves. Managed properly, today’s OM can become the wisdom for tomorrow and the day-after-tomorrow’s managers to stop repeating organizational mistakes, to improve on successes and not to have to re-invent already-won wheels. ‘I forgot to remember’ is an excuse that needs to be its own distant memory. And because no one else can provide them with their own OM, it is up to employers themselves to orchestrate the resource. Short jobs tenure, corporate amnesia, experiential non-learning and poor decision making are all now inter-related phenomena of the modern workplace. To better benefit from their flexible workforces, employers need to make much better use of their dormant wisdom that, manifestly, has already been hard-won and expensively paid for. Whispered another way, it’s an approach that maximizes human capital by utilizing employees after they’ve left the premises, an enticement for nil-cost gain if there ever was one. And the derivative opportunity for educators is that industry and commerce need to be better taught how to learn to do it – and all for one big fat additional reason: to help improve productivity, the lifeblood of competitiveness, and the key to staying in the game. Not the type of productivity that comes from just labor cutbacks and capital retraction, but the more serious productivity that can be understood from the title of the next chapter – Getting from A to B without going via Z, the time-honored formula that kick starts the ability to sell more. If one can sell more, ipso facto growth …. Growth through competitiveness Take the latest economic crisis, the most serious since the 1930s with costs in the trillions to the power of plural. At the time of writing, the predicament is more than four years old. The heavy-handed fiscal and monetary measures have, as yet, brought little gain and the prospect is for many more years of austerity. How to cut the heavyweight deficit and realize growth is the desperate new religion. Given that most economists see productivity increases as one of the main factors to trigger economic growth and that the agreement of Eurozone countries in 2011 was that the resumption of growth had to come through a relentless focus on improving competitiveness, why, then, is not active, dedicated and real Experiential Learning loudly on the training schedule? Much like those very fit Olympian contestants. And just to check whether or not this might work, consider this: deep as the U.S.’s problems are, which developed country is showing the most growth? The United States, whose productivity still tops all its competitors! Copyright © September 2012 Arnold Kransdorff Authors Credentials Posted August 27, 2012 by waytoogo in Knowledge Management Tagged with action learning, after-action reviews, benchmarking, Brazil, business education, case studies, China, cliometrics, competitiveness, continuous improvement, corporate amnesia, corporate history, decision making, disenfranchise, economic history, evolution, exit interviews, experience, experience based management (EBM), Experiential Learning, explicit knowledge, flexible labor market, growth, hindsight, human resources, India, innovation, job continuity, Knowledge Management (KM), knowledge preservation, knowledge transfer, Korea, lessons learned, MBA, mentoring, oral debriefing, Organizational Memory (OM), productivity growth, reinvented wheels, repeated mistakes, Russia, tacit knowledge, The Learning Organization, Wisdom Author’s Credentials 2 comments Arnold Kransdorff was the first to identify the phenomenon of corporate amnesia in the early 1980s, soon after the flexible labor market started to make a significant impact on job tenure. His first book on the subject, Corporate Amnesia, was short-listed for the United Kingdom’s Management Book of the Year in 1999 and was selected as one of 800 titles worldwide to launch the Microsoft Reader eBooks program in 2000. His second book, Corporate DNA, expanded the subject to explain how organizations could help their transient managers apply captured knowledge and experience in the cause of better decision making. This edition updates the subject even further. An expert practitioner of Knowledge Management (KM) and the leading authority on the consequences of the flexible labor market, his unique specialty is the management of Organizational Memory (OM), the institution-specific know-how accrued from experience that characterizes any organization’s ability to perform. His work is widely published in academic journals, trade journals, and the national press. He has project managed and edited over a dozen corporate histories—the most efficient vehicle for capturing long-term OM—and pioneered the development of oral debriefings—the equally efficient verbal vehicle to capture short- and medium-term OM. A former financial analyst and industrial commentator for the Financial Times in London, he has won several national and international awards, among them Industrial Feature Writer of the Year (1981) and an Award of Excellence (1997) from Anbar Management Intelligence, the world’s leading guide in management journal literature. He has co-supervised a U.S. doctoral thesis on OM, is a guest lecturer at many U.K. and overseas business schools, and is a regular speaker at international business conferences. He has assisted in the Royal Society for the encouragement of Arts, Manufactures, and Commerce’s Inquiry on Tomorrow’s Company, the Economic and Social Research Council–commissioned study on Management Research, the Confederation of British Industry’s deliberations on Flexible Labour Markets, and the Washington, D.C.–based Corporate Leadership Council’s study on New Tools for Managing Workforce Stability. Contact the author: ak@corporate-amnesia.com Author’s Other Websites… www.pencorp.co.uk www.corporate-amnesia.com Posted August 12, 2012 by waytoogo in Knowledge Management Create a free website or blog at WordPress.com. The Andrea Theme.