Avoiding the pretense of knowledge management

When Friedrich Hayek received the Nobel Prize for Economics in 1974, he delivered an acceptance speech on the “The pretence of knowledge.”
In this article I will explain how we can benefit by revisiting Professor Hayek’s essay and applying some of the lessons learned from economics to modern KM.
Many KM approaches assume that to improve efficiency and effectiveness an organization must capture knowledge from workers. Often knowledge capture is portrayed as being part of a robust KM system that involves creating, capturing, sharing, and applying knowledge. Listen to a KM consultant, architect or guru today and sooner or later you will hear the word “capture”. Many times it’s the main benefit claim such as:

 

 

In 2005, we had reached a point where that wealth of knowledge across disparate practices, offices, countries and cultures meant that finding the right information that would make a difference in a client context, was becoming a barrier to achieving the greatest impact. It was time to consider what changes might help derive greater value and sharing of this great and dynamic resource.

 

• “Our KM system will be assembled by capturing knowledge”; or
• “The purpose of this KM system is to efficiently capture knowledge from across the organization”.

The premise of these claims is that if knowledge is the resource of the century, which alone can build sustained competitive advantage, shouldn’t we be capturing it so we can compete in today’s global environment? Drawing inspiration from Hayek, I label this claim, “The Pretense of KM”.

 

 

Mistaken purposes
If capturing knowledge from workers can really help an organization perform better, then it raises the question of who is capturing knowledge from whom? Often it’s simply other individuals gaining access to knowledge extracted from those less empowered to make use of it themselves. If you’ve hired smart people they will figure out that this is a good and bad idea. No matter how many papers and studies are generated showing the impact of people factors in KM systems, there are still vendors hawking knowledge scraping systems to capture organizational knowledge based on the assumption that no one will notice their missing knowledge. People are no more willing to give up their tacit knowledge to the collective company than they are willing to donate body parts – unless of course they are ideal type of employees portrayed in the movie The Island.
We should have already learned this lesson courtesy of Hayek. If KM experts applied a little of their own rhetoric to themselves, they would notice that knowledge organizations operate efficiently as open market systems where the information and knowledge flow naturally.

 

Defective interventions
Even worse things can happen when knowledge capture gets attention as an intervention tactic to mitigate damage from downsizing efforts; for example, a KM system will allow the organization to downsize without losing organizational knowledge. The sales pitch for these KM systems is, “This system will allow you to keep the knowledge without having to keep the people.” If this made sense, then why limit the capture to downsizing? The more people you can strip of their knowledge and let go, the more you improve the bottom line. This mentality is not unlike the foolish miser who fed his donkey less food each day until one day it died, causing the man to lament: “Only a few more days and I would have had it living on nothing!”

Some KM systems have more in common with the energy capture systems of the machines in the movie The Matrix. It’s why most KM systems smell like brain farms to intelligent carbon-based-life-form employees. But why can ordinary employees smell the rottenness of this “pretense of knowledge” while so many managers think it smells like success? We may have to pay more attention to the role of knowledge in society.

 

To quote Drucker, “Knowledges by themselves are sterile. They become productive only if welded together into a single, unified knowledge. To make this possible is the task of organization, the reason for its existence, its function.”
Thus an organization both facilitates knowledge flow internally and creates boundaries within which knowledges can be combined and applied. Perhaps if we first tried to apply some of the lessons learned about knowledge flows in society we would gain more credibility and have a greater likelihood of positive change with KM interventions.

 

The pretense of just-in-time learning
KM is often described as “getting the right information to the right people at the right time”. People may be leaving the organization and taking their knowledge with them (retiring, getting riffed or job-hopping), or they may be hoarding knowledge and not making it available to others who could make good use of it.
Thus, if only the right people had all the knowledge, they could make wise decisions about how to use it for the good of all. Hayek was both a philosopher and an economist who exposed the fallacy of collectivist theory that supposed market knowledge could be better used by a few knowing (centralized) people. His counter-claim was that economic knowledge is most valuable when distributed and used in an open market. The “right information, right people, right time” definition of KM assumes that people can better prioritize and allocate knowledge than a knowledge market can.

 

If only the animals could take over the farm and run things for a while.
The other danger of the “three-rights” model is that it invariably leads to an efficiency focus with little thought for effectiveness. Davenport and Prusak have clearly articulated the technology/efficiency fallacy: “Technology alone won’t make a person with expertise share it with others. Technology alone won’t get an employee who is uninterested in seeking knowledge to hop on a keyboard and start searching or browsing.

The mere presence of technology won’t create a learning organization, a meritocracy, or a knowledge-creating company.”

 

A flow, rather than collection of knowledge
Millions of dollars have been wasted trying to get people to part with their knowledge for the collective good. Knowledge, like capital, will find its own best use. The Soviet Union could not control the flow of capital or knowledge out of their territories to escape the grand socialist experiment; neither can organizations in the digital age hope to control their employees’ knowledge through collectivist schemes.

 

The truth of Hayek’s statement that “Those intoxicated by the advance of knowledge so often become the enemies of freedom,” is ironic today. This is a statement worth pondering in light of many corporate policies on knowledge and intellectual property:

 

• After World War Two, the US was intensely interested in getting German technology and rocket scientists like Verner von Braun, who helped us win the race to the moon. But American leaders also embraced Keynesian notions that governments could fix business cycle ills with a superior macro knowledge of market operations, while shunning the ideas of Hayek and fellow economist, Ludwig von Mises.
• Social elites enthusiastically if not vainly debated whether the Soviet five-year plan would work better than the French Plan Indicatif to centrally manage an economy. Productivity fell in both countries, which gave capital investment a diminishing or even negative return. The French economy still lags, while the Soviet Union
  has collapsed.

 

The current KM frenzy suffers from the same faulty reasoning that led us to buy into the Keynesian “long-run-dead” argument that sacrifices long-term value for short-term and unsustainable returns. By taking control of private enterprise, the collectivist may return to the citizens’ immediate value on paper, but doing so destroys the very dynamism that created that value in the first place.

Edmund Phelps (Nobel Economist 2006) describes the socialist paralysis in terms of dynamism as the “fertility of an economy in coming up with innovative ideas believed to be technologically feasible and profitable.” Failure to see the parallels between dynamism in the economy and dynamism in the organization will lead us to repeat the mistakes of social corporatism in the arena of KM. Phelps goes on to point out that; “The challenges that arise in developing a new idea and in gaining its acceptance in the marketplace provide the workforce with high levels of mental stimulation, problem-solving, employee engagement and, thus personal growth.” The three-rights KM approach and its attending capture mentality destroys dynamism, the lifeblood of knowledge organization by treating employees as expendable automatons.

 

Knowledge as a resource
Adam Smith, the 18th Century philosopher and economist, marvelled at how something so esoteric as distributed consumer preferences could self-organize into economic benefits. Hayek, Phelps and economist Milton Friedman explained the workings of social economics so we can see how free flowing knowledge powers capitalistic market economies. In organizational thinking, books by Drucker, Prusak and Wegner have led us to understand the productive value of knowledge as a resource, the organizational role of knowledge within a firm and the dynamics of knowledge flows that often transcend arbitrary organizational boundaries through communities of practice.

If knowledge is most valuable in an economy or organization as a distributed good, how then is that value realized if not by capturing it? The answer lies in valuing knowledge circulation that keeps knowledge moving rather than trying to capture tacit employee knowledge. Achieving that requires deeper thinking about human systems, some enabling information technology and much more dedicated leadership in this area than we are currently deploying. Smart leaders will figure out how to make their organizations function as internal knowledge markets where the distributed knowledge can find its way to effective application. Leaders will have to avoid the temptation of reaching for “IT easy buttons” that often waste money, de-skill employees and trade long term-value for short-term gains. We learned in the eighties that complex stock trading computer systems do not themselves create open equity markets in developing countries. The same is true in organizations where people trade knowledge inside social boundaries. The smartest KM capture system will not make an information controlling organization function like an open sharing community; in fact, you may just end up with a dead donkey. So, let me suggest three things leaders can do to help their organizations be smarter and perform better:

1. Focus on learning practices, not technology.
2. Understand your organization.
3. Lead by example.

1. Focus on learning practices, not technology

First, avoid the common pitfall of easy button solutions. This is obvious, but many organizations still don’t do it. A lessons learned database or pricey KM IT system will not solve your problems. The sooner you recognize this (and probably remove KM from the CIO’s responsibilities), the less time will be wasted repeating mistakes.

To do this requires a philosophical understanding of knowledge, something few managers are willing to develop. For example, a Government Account Office survey of NASA’s learning processes documented that people were mainly learning through reviews, briefings, and informal discussions with colleagues. The implication was that this was not efficient, so a lessons learned system had to be built. The result has been the development of a database that has marginal value, while the practices from which people are actually learning have been ignored. Instead, at the Goddard Space Flight Center, I set out to develop practices that actually help people learn better from reviews, briefings and informal discussions by equipping them with practical means to improve their sharing and learning as they work.

I use a Pause and Learn process (interim retrospects), knowledge-sharing workshops and case studies. It’s hardly rocket science, but these practices have been adopted throughout the Goddard center and they are having an impact.
Five years on from inception, the NASA lessons learned database is still not fully operational and remains of questionable value.

 

2. Understand your organization

Second, we must understand the true nature of our organizations in order to be able to address any cultural or behavioral dysfunctionality. As a failure to understand what actually drives individual economic decisions led collectivists to believe they could direct the economy more efficiently, so KM leaders may be led to believe that they can drive the functioning of the organization more efficiently without really understanding how it works in the first place. The common error is that of trading apparent efficiency for unknown effectiveness. This trade is made over and over again in world economies and within organizations ranging
from governmental agencies to large, multinational business conglomerates.
It’s important to get beyond the organizational charts and process maps to understand why the system works before any attempt to make meaningful systemic changes. Currently, one of the best ways to do that is through social network analysis (SNA). I’m embarking on a task to understand how the knowledge actually flows within Goddard.

 

3. Lead by example

The third critical step for KM success is leader involvement in knowledge sharing. Leaders must be sharing their knowledge into the organization, not looking to amass knowledge to themselves. How much time do your leaders spend sharing their wisdom, teaching, sharing openly, admitting mistakes, and receiving input from the workforce?

 

Leader involvement is critical because leaders have the experience to make sense out of a situation and see how to learn from it – and because they model behavior it will be replicated by managers down the line. If your leaders can admit mistakes and less-than-perfect decision making, then so can your managers. Admission becomes not a weakness but an opportunity to learn, and it facilitates the flow of all information, reduces dangerous filtering (the good news only syndrome) and other malfunctions of organizations that don’t admit failure. Finding ways to engage leaders energizes them because they see how they’re making a difference. Success is having senior leaders willing to cancel other meetings to attend
a KM learning event.

 

Accept the dynamics of modern organizations

At NASA, like other federal agencies, we face the issues of increasing complexity of work, tightening budgets, and an aging workforce. Knowledge is a precious commodity, expensive to procure, difficult to manage, yet essential for success. We can’t see how the knowledge we collect today will be used tomorrow. We can cultivate an organization that facilitates learning from each other, from past experiences, from similar but different events and uses that knowledge to address new challenges. Such an organization thinks for itself. Such an organization is alive and growing. Such an organization will attract the brightest minds because they will flourish in such a rich learning environment.

In pursuit of our lofty goals, Hayek reminds us to be humble in our approach to knowledge: “If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as a craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment in the manner in which the gardener does this for his plants.”

NASA and other high-tech organizations will not succeed by dumbing down work with artificial intelligence, de-skilling our experts with endless rules or centralizing all knowledge bases. Rather, success lies in building upon what makes NASA unique and strong: our mission, our attitude toward challenges, and our utter dependence upon each other to get the job done that drives us to engage in an active internal knowledge market. Just capturing knowledge will not make us smart enough or our organizations function well enough to avoid mistakes in the future. The pretense that we can assemble all the knowledge we will need to succeed has been exposed by Hayek within the politico-economic realm. We should apply his lessons to the organizational world and avoid falling into the trap of a pretense of KM.

 

NB: The views expressed herein are those of the author and do not necessarily represent the position of the Goddard Space Flight Center or the National Aeronautics and Space Administration. An earlier version of this article was presented at the KM for the Government Sector Conference, November 2006, Washington, D.C.

 

References
• Friedrich A. von Hayek, “The Pretence of
• Knowledge,” (1974), Nobel Prize Lecture
• Drucker P., Post-Capitalist Society, (1990), p50.
• Davenport T., and Prusak., Working Knowledge, (1998).,Harvard Business School Press, p 42.
• Hayek F.A., The Constitution of Liberty, (1960) p26.
• Phelps, E. Dynamic Capitalism, Wall Street Journal, 10 October 2006 p. A14.