IN recent years, there has been a growing emphasis on knowledge in organizations. This is evident in heightened interest in the cultivation of an organization’s capacity for information, competence, resources, capabilities, talent, learning, as well as the ability to mobilize these capacities.
Organizations have been sold to the premise that knowledge is a key to being competitive. Considered by most as an asset, knowledge supposedly resides in databases and people that are distributed across the entire organization. In business consulting, knowledge management involves “the identification and analysis of available and required knowledge, and subsequent planning and control of actions to develop knowledge assets so as to fulfill organizational objectives.”
Despite being not often clearly defined, knowledge is touted as “the most strategically important of the firm’s resources.” And for an organization to be competitive, it is imperative that knowledge be created, shared and transferred efficiently.
However, in practice, the full mobilization of these capacities is illusory. In other words, decisions and resulting actions based on an organization’s “knowledge capacity” will only be semi-rational at most. The concept of ‘bounded rationality’ highlights the inability to make completely rational decisions due to lack of time, information, and information processing capacity, among others. At best, acceptable or reasonable decisions are only arrived at within the limitations of available time and resources.
As a source of competence, organizational skills also hinder rationality. Many managers are considered skilled simply because they know what to do when faced with a situation. Typical in most organizations, tasks are completed instantaneously based on existing scripts and routine. These are formal and informal procedures that guide responses to situations and occurrences. When internalized, these procedures make it possible for managers to act with little or no thinking. However, their incompetence emerges when situations deviate from the known and accepted script.
In the garbage-can model of decision-making, organizations are garbage cans wherein a continual stream of problems, situations, people and solutions are dumped. Timing dictates the right moment when some of these will coincide and a decision is produced. The model puts great emphasis on ambiguity, dynamics, and unpredictability in organizations. It highlights how decisions often involve a random configuration of problems, solutions, and opportunities. The randomness compels the use of trial and error. It facilitates new actions that may not necessarily guarantee benefits. The variable levels of ambiguity simply prevent one from fully mobilizing knowledge capacities and completely acting rationally.
Since Aristotle, human beings have been arbitrarily assumed to be rational beings. Lately, the likes of Daniel Kahneman, Dan Ariely, and to a certain extent, Nassim Nicholas Taleb, demonstrated that humans are not nearly as rational as they would like to believe.
When presented with uncertainty, humans are expected to evaluate information carefully and critically. Instead, they depend on existing scripts, procedures and mental shortcuts that could be found to be insufficient, incompatible or inappropriate.
A study published in the Journal of Personality and Social Psychology suggests that in most cases, smarter people are more prone and vulnerable to these biases. In other words, it has nothing to do with knowledge.
According to Albert Einstein, two things are infinite. Stupidity is one of them.
Real Carpio So lectures on strategic and human resource management, organizational behavior and management of organizations at the Management and Organization Department of Ramon del Rosario College of Business of De La Salle University. He is also an entrepreneur and a management consultant. He welcomes comments at firstname.lastname@example.org. The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty and its administrators.