We examine the present in light of the past
so as to better understand the future.
John Maynard Keynes

* With apologies to Karl von Clausewitz

Knowing Me, Knowing You

What kills more companies than anything else? Lack of knowledge.

Managers in those companies that fail will say otherwise, of course. They will blame the market, or their customers, or their banks, or the regulators for problems that derail their businesses. These things play a role, yes, but they are only the proximate causes of failure. The real cause is the lack of ability to deal with threats as they emerge, and that lack of ability in turn stems from lack of knowledge.

Japanese strategy guru Kenichi Ohmae once described managers who don’t know how to deal with threats as ‘deer caught in the headlights’. They stand in the middle of the road failing to anticipate a threat, and when they do see it coming at them, they don’t know how to react. They stand, paralysed by their lack of understanding, until the car hits them and kills them. I’ve seen companies behave like this, too many times.

In my new book Managing for Success, I talk about cultures of ignorance that develop within companies, where the value of knowledge is either ignored and ignorance pervades decision making at high levels. Ignorance is not necessarily a pejorative word. There can be all sorts of reasons why we don’t know things: lack of experience, lack of education, lack of exposure to new things and new ideas. These aren’t always our fault, and our ignorance doesn’t make us bad people. But it does make us fatally underqualified as managers and leaders. Without knowledge, we are groping in the dark.

What happens to companies that lack knowledge? Very often they fall back on the little that they do know, and hope this will help through the darkness around them. Theodore Levitt in his famous article in Harvard Business Review talked about ‘marketing myopia’, the common practice among managers to shy away from trying to understand the market because it is too difficult and too uncertain and instead concentrate on the things we can control, like efficient production. But you can be the most efficient producer in the world and still fail, if you don’t know what the market wants.

All of this, or should be, common sense. And yet many companies still fail to privilege knowledge. They don’t invest enough in training and development, or if they do, they do in the wrong kind of training and development (I’ll have more to say on this subject in a later post). They don’t build up stocks of organisational knowledge, accumulated experience that everyone can draw on. Very few companies are good at tapping into the tacit knowledge of their employees in the way that Nonaka and Takeuchi advised.

One of the first steps to building a lasting business and avoiding failure must be to create a culture where knowledge is privileged and ignorance is not tolerated. If your staff don’t know what they are doing, you have a simple choice: train them, or fire them. The same goes for yourself. In Managing for Success, I state that if within six months of taking a job, you do not know everything important there is to know about your business, you should be fired. Your boss should also be fired, for not making sure that you got out there and learned.

Chinese strategy guru Sun Tzu argued that if you know the enemy and know yourself, you need not fear the result of a hundred battles. It’s the same in business. If you know what your customers want and know how to give it to them, you will win through adversity. If you don’t know either of these things, then your company is what Sydney Finkelstein calls a ‘zombie company’, dead on its feet. The end will not be far away.

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Adi Gaskell commented on
Management Consultancy

Pradee commented on
Oh, no, not another book on management!

Laurie commented on
Another one bites the dust - reflecting on my new book on management failures