The Importance of Useless Knowledge in Management

The Importance of Useless Knowledge and the Humanities: The MBA Whisperer

Although managing a business can be very complicated, the solutions for solving problems often seem deceivingly simple. Managers resolve even the most complex issues with a two-by-two matrix. Practical managerial discussions are to the point, directed towards the problem and utilitarian—aimed at solving problems and improving the bottom line. But in that goal-directed behaviour, management often loses purpose.1

The Lucid Manager advises that to become the best possible manager, you should invest time in acquiring ‘useless knowledge’. The type of knowledge that does not directly enhance the bottom line, but enlightens the individual.

British philosopher Bertrand Russell once beautifully expressed the importance of useless knowledge:2

I have enjoyed peaches and apricots more since I have known that they were first cultivated in China in the early days of Han Dynasty; that Chinese hostages held by the great King Kaniska introduced them to India, whence they spread to Persia, reaching the Roman Empire in the first century of our era … All this makes the fruit taste much sweeter.

To enlarge and sweeten the fruits of management, business people need to embrace so-called useless knowledge. This knowledge is not the type of useless knowledge that hits you in the face when reading the trivialities on Twitter feeds or Facebook updates. The canon of useless knowledge is more profound than that and includes philosophy and its continuous questioning of everything, the lessons of history and appreciation of the arts—the humanities.

The words “useless knowledge” are problematic. There is no such thing as useless knowledge, and a better term would be indirect knowledge. This the type of knowledge creates a holistic person and helps to solve problems by introducing new perspectives from outside the world of business. Wielded correctly, excellent understanding of the humanities will make you a better manager.

Knowing the basics of philosophy of science helps to understand ‘evidence-based management’. Understanding ethical dilemmas and the solutions proposed by philosophers might prevent managers from making morally wrong decisions. A well-grounded appreciation of the arts beyond economic value helps in creating beautiful products.

The best example of an organisation that has integrated both business utilitarianism and the humanities is an Apple computer. In the words of Steve Jobs:

It’s in Apple’s DNA that technology alone is not enough — it’s technology married with liberal arts, married with the humanities, that yields us the result that makes our heart sing …

Useless knowledge makes you question the certainties of life; it creates a thoughtful and reflective mind, protected against impulsive decision making.

Lucid managers embrace useless knowledge and study the classics and the humanities. Read some of Plato’s dialogues and learn from Socrates how deviant behaviour leads to innovation.

The Social Gadfly: The Benefits of Socratic Management

The Social Gadfly: The Benefits of Socratic Management

When studying business, there is little time for critical reflection on what has you have learnt. Universities arm newly minted MBAs with management tools such as Maslow’s Hierarchy of Needs, the BGC Matrix, Porter’s Five Forces and other devices to solve business problems. Their acceptance as valid tools is, however, often not based on critical reflection or solid empirical research but on mythical stories of how they were used successfully in the past.

The study of business and most of writing about business is based on the case method. In this system, students are presented with a business problem and placed in the shoes of the decision maker charged with solving the problem. This article briefly discusses what we can learn from ancient Greek philosophers and why we should practice Socratic management.

In the Critical Perspectives on Management course, Rolf Strom-Olsen advocates an approach that deviates from the standard case methods and draws from the more critical humanities. He sees the life of the ancient Greek philosopher Socrates as a signpost for a different way to think about business.

Socrates: “I know nothing except the fact of my ignorance”

The benefits of Socratic management

We know about Socrates from the vivid writings of Plato who was one of his followers. His books form the foundation of European philosophy and in fact, profoundly influenced Western civilisation as we know it. Socrates spent his time meeting people in the marketplace in Athens and questioned their opinions and cherished beliefs. Socrates was like an annoying toddler that keeps asking “Why?” to find the foundations of what we hold to be true. The Athenians themselves compared him with a gadfly, a fly that annoys horses and other livestock. A lifetime annoying people by questioning everything they know is, in the words of Rolf, not a way to Win Friends and Influence People. Socrates thus paid the highest price for his life as a social gadfly—he was convicted of drinking a cup of poisonousness hemlock and died.

From my experience, it is clear that being the social gadfly in business can be a dangerous activity which could lead to career suicide. For me, following the Socratic path has helped me to be very successful in solving business problems. Only by daring to ask the hard questions and draw from disciplines outside business we can see perspectives on issues that a case method cannot provide.

The traditional case method of solving business problems looks backwards at past experiences. Using the analytical method from the humanities allows us to draw from entirely different perspectives and analyse issues in creative ways. Business is an applied social science, and it seems only reasonable that the methods of social science should be used to understand the problems of humans.

Socratic Management: philosophical deviance to improve performance.

The Lucid Manager is courageous and not afraid to be a social gadfly and practices Socratic management. The Lucid Manager stops asking “Why?” and goes beyond The Five Whys if needed. View your problem from all angles—including disciplines that are not traditionally used in business. Reading about the life of Socrates teaches the way of philosophical deviance as a path to business success. Following the path of Socrates will help you to develop those cherished innovative solutions.

Buddhist management: Organisations do not exist

Buddhist management: Organisations do not exist

Yesterday, Cyndi Laurin presented at the World Business Capability Conference about The Four Pillars of Organizational Greatness. Cyndi discussed one analogy that stuck in my mind as it took me back to my days as a philosophy student. Cyndi asked which part of a car is the most essential. The audience mentioned several options, and then it dawned on me that this analogy is much like a famous line of reasoning in Buddhist philosophy about the self, which I will use to show that there is no such thing as an organisation and that no one part of an organisation is essential or more important than another.

One of Cyndi's slides
One of Cyndi’s slides.

The idea of the firm in Buddhist management

The Buddhist management view of the firm would be that there is no such entity, illustrated by a debate between King Milinda and the Buddhist monk Nagasena.1

Following the analogy used by the monk, we can compare a firm with a chariot, or in more modern terms a car. None of the individual parts of the car (the wheels, the engine, the radio and so on), are the car. Nor can you say that the combination of the parts is the car. We can not discover a firm at all, only the word that denotes the idea of the business. A business consists of its parts, just like a car does. None of the components of the firm, however, are the firm. No part is less important than the other—although followers of the Lean philosophy will disagree on this one.

The Buddhist management argument extends to management in that a firm is not about its constituent parts, but a firm is a cycle of cause and effect, or in Buddhist terms, Karma. A firm is not about its CEO, the share price, employees, customers or fancy headquarters. A company, just like a person, is defined by the actions it takes and their results.

Following the Buddhist view to its conclusion, there is only one pillar of organisational greatness: the actions taken by the organisation and the impact these actions have on the beneficiaries.

Management Alchemy: What is the Philosopher’s Stone of Management?

What is the Philosopher's Stone of Management?

Managers and alchemists have a lot in common. Alchemists look for the philosopher’s stone to find wisdom while managers seek their inspiration in theories.

In management,  there is a vast disconnect between the popularity of theories and their empirical evidence. Popular theories usually suffer from a lack of empirical validation, while empirically supported theories published in peer-reviewed management journals remain obscure and unknown.

In a recent paper, Mata Alvesson and Jörgen Sandberg lament the field of management studies is stronger in producing rigour than in creating exciting and influential theories.1

The infamous Boston Consulting Group Matrix, which is taught to business students worldwide, has been called the “philosopher’s stone of the consulting business”. The BCG matrix has been used as a rationalisation to fire people or undertake a merger.2 The matrix legitimises action through symbolic references to the mystique of strategy.3

Humbug in management is, however, not a recent development. Management guru Chester Barnard expressed it in 1938 as such:4

I believe that a good deal of conflicting bunk is taught in these fields. This argues for improvement and development, not against teaching what can be taught. In the time of Newton, or even much later, a great deal of modern physics, and much that is fundamental in it, was not known, and for this reason perhaps a good deal of bunk was then taught in the field.

Management is historically speaking a very young field of endeavour. Formal studies of how people behave in a professional environment only started when Frederick Taylor analysed labourers logging pig-iron.

Management Alchemy and the philosopher’s stone of management

The natural sciences are much older and have developed a rigorous method that ensures their success. However, in the early days of the physical sciences, even prominent figures such as Isaac Newton spent a considerable amount of time on alchemy and other occult studies in an attempt to find the Philosopher’s Stone.

Whether this means that, several centuries from now, management theory is as successful as physics in controlling reality, remains to be seen. Management, strategy and marketing are inherently social sciences, and people are not billiard balls whose trajectories can be predicted and controlled.

The Philosopher’s Stone of management is the art of understanding people. The key to understanding people lies not in the rigorous statistical analysis of questionnaires, but in the life experience of the manager.

Do You Know Your Customers? Sociological Imagination in Marketing

Do You Know Your Customers? Sociological Imagination in Marketing

Customers are the lifeblood of any organisation. Marketing is, very simply put, the process of creating customer satisfaction or in the words of Philip Kotler, “customer satisfaction engineering”.1

To be able to market well it is as such extremely important to know who this other person is and understand their needs and wants. In the words of my former marketing professor Rhett Walker, you need to find out what “rattles their cage”.

Marketers mainly do this by using simplified quantitative models of social reality. They like to know where customers live, who their customers are, how they purchase and use stuff and why they buy stuff in the first place. Like a baby playing with blocks, they match the segments with their products and services, making sure not to put a square peg in a round hole. Selling ice to Eskimos is clearly a case of segmentation gone horribly wrong.

It is tough to make sense out of the myriad of variables available within the four broad types of segmentation. But people’s drive to simplify the complexity of social reality knows no bounds. Some companies have developed excellent tools to help marketers to segment their market in easy to understand chunks, such as the Roy Morgan Values Segments and the VALS  (Values, Attitudes and LifeStyles) system. Unfortunately, these systems are propriety, and it is difficult to assess their validity, but that does not diminish their popularity. You can even do the VALS survey online and find out what your primary and secondary type is. It only takes 39 simple questions to classify every human being into neat categories.

Sociological imagination in marketing

These systems certainly serve a purpose, but they can be no replacement for a real understanding of human beings. To be a successful marketer requires sociological imagination which is the ability to recognise relationships between patterns in society and the actions of individual people. The quantitative sociology of segmentation cannot lead to an understanding of people, it can only describe them. Understanding is much harder to obtain. In the words of C. Wright Mills:2

“Neither the life of an individual nor the history of a society can be understood without understanding both”.

Sociological imagination in marketing is a quality of mind, rather than analysing a set of data. Unfortunately, this type of knowledge cannot be summarised in beautiful diagrams nor can it be scientifically tested with statistical models. Sociological imagination in marketing is a narrative that grows through debate and life experience.

To truly understand customers you need to look beyond the source of revenue with a multitude of labels, but understand them in a qualitative sense. You need to find out what rattles their cage.

Theory and Practice of Management: Humbug, Buzzwords and Fads

Theory and Practice of Management: Nothing More Practical than a Good Theory

One of the grave problems in the theory and practice of management is the dominance of buzzwords, fads and humbug. Just a quick look at the management section in the local bookshop will prove this point. Management thinkers are possibly some of the most influential people of the current age. They influence, for better or worse, the lives of millions of people and have even spawned a separate language, flushed with buzzwords.

Management thinking is, due to its very nature, entrepreneurial and everybody who has an idea wants to ensure that as many people as possible read it and perhaps make a few bucks in the process. More than any other science, management ideas are primarily developed to make money, and people are willing to pay good money for them, as innovative ideas can significantly impact the bottom line.

This article briefly reviews the relationship between theory and practice in management in light of the dominance of pseudoscience in business.

Theory and Practice of Management

A problem with the theory and practice of management is that solid scientific research does not underpin many management theories. As a working manager, you need to be equipped with a pretty good ‘bullshit radar’. Looking around the management section of the average bookshop the volumes on sale do not seem to meet the rigour of academic research. Popular management books give you ‘simple solutions’ to success. Good to Great by Jim Collins is one of the best selling volumes in this genre.

The Business Pundit blog provides an excellent critique of Collins’ pseudo-scientific writing. The book is touted to be based on solid scientific analysis of data, but in fact, relies mostly on Jim’s intuition (p. 11):

“We all have a strength or two in life, and I suppose mine is the ability to take a lump of unorganized information, see patterns, and extract order from the mess – to go from chaos to concept.”

Collins did not use any advanced statistical analysis of the data, and there are no indications of the validity of his findings. Although he repeatedly emphasises the data, his interpretation of the data is not scientific but based on intuition. There is nothing wrong with using intuition to make specific decisions, but you can not call it science and generate general rules for good business management unless findings have a solid foundation. Enron, one of the companies that according to Collins went from Good to Great, but after the Global Financial Crisis, it quickly became apparent that Enron’s success was just smoke and mirrors.

The reason pseudo-scientific books like Good to Great are bestsellers is that our brains are not naturally wired to be critical thinkers. The success of a lot of business literature is based on confirmation bias and the Forer Effect. We prefer information that confirms our preconceptions. Also, most popular management theory does not go beyond self-fulfilling prophecy, and broad sweeping general statements and its popularity is in essence based on the same psychological principle that explains the success of astrology and other forms of divination.

Another problem is that the average manager does not have the capability or motivation to understand elaborate theories that underpin human behaviour fully. Managers don’t want to read complicated scientific theories. Good advice to those who seek to write a management best seller is to stay away from using any sophisticated analysis.

Management is, in essence, a social science that aims to influence human behaviour to achieve a collective goal, whether that be increasing profit or creating a great piece of orchestral music. Management seeks to change the behaviour of customers to convince them to purchase goods or services. Management tries to influence employees to ensure goal-oriented behaviour. Management theory is also about influencing or anticipating the behaviour of the external world, i.e. the stakeholders and possible competitors.

Nothing More Practical than a Good Theory

As a social science, management does not follow the strict rules of the natural sciences. There are no simple formulas to ensure staff motivation, increases sales volumes or assuring customer satisfaction. Management is about human behaviour, which is intrinsically unpredictable. Collins and other popular management writers do not use scientific methods, but there are natural limits to what the scientific method can achieve in management. All we can hope to achieve is to develop statistical models. These models do, however, not produce simple statements about friendly concepts such as ‘Level 5 Leadership’ and the ‘Hedgehog principle’. At best, the scientific analysis provides partial insights into a very specific phenomenon instead of the organisation as a whole.

There are also too many practical and ethical issues with undertaking full-scale management experiments that would be required to make the sort of claims that Collins promoted in Good to Great. Merely looking at sets of data from the past can not generate such claims because there are too many confounding variables that are not covered by the data. In other words: the principles distilled by Collins might not be the only reasons these hand-picked companies were successful.

Scientific theories do, however, remain an essential tool to regulate our intuition. Before we had a consistent theory of gravity, architects were very limited by the size of buildings they could create. As our theoretical and practical knowledge of physics increased, so did the size and complexity of structures. A theory is required to propel human knowledge and even though management is many times more complicated than skyscrapers, using only intuition will not improve our understanding of managing organisations.

In conclusion, because management is a social science, we can not rely on theoretical models alone. Working with people requires insight and intuition that can only be obtained by life experience. However, theory underpins our intuition, and in the end, there is nothing more practical than a good theory.