Practical Wisdom: Making sense of the eco-system
Article written by Mark Easdown
Business Strategy, Leadership, Collaboration, Ways Of Thinking & Working
““It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.””
““Without this texture of experience, the data shoved before these executives’ eyes loses any truth. Context and colour are absent; all that remains are abstract representations of the world rather than the world itself.””
““Practical wisdom,” Aristotle told us, “is the combination of moral will and moral skill.””
What is it when you encountered an executive team, your boss, a colleague, a team member, a peer displaying these following characteristics;
Understanding the context, the enterprise strategy and how to serve the common good
A balancing of conflicting directives, interpretation of rules in light of the situation
Perception, sharing others views, see the shades of grey, can apply practical solutions to particular problems
Does the right thing because it was the right thing to do, with the interest of the common good in front of mind
Applies wisdom, knowledge and experience, learnings from previous mistakes to a specific context
It is Practical Wisdom in action…
Aristotle (384-322 BC) in the Nicomachean Ethics distinguishes between three types of knowledge:
Episteme (universal, theoretical understanding),
Techne (skill, craft, technique understanding)
Phronesis (practical wisdom, prudence, ethical knowledge, rational, linked to the senses, to perceive, to deliberate and action orientated).
His basic ingredients of Practical Wisdom were: Knowing one’s role or objective, perception of particular situations, an informed intelligence, learning from experience, deliberation on the best course of action, it is not enough just to be wise, you must actually do it.
Practical Wisdom has evolved through time with the writings of Thomas Aquinas and many modern-day scholars, thought leaders and business schools.
So, Why (Where) is Practical Wisdom still relevant and of interest today?
Practical Wisdom within law-making
In 2019, the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was handed down by Commissioner Kenneth Hayne. The report underscores many fundamental themes;
Importance of boards getting the right information and challenging management (yet adds the caution: “Often, improving the quality of information given to boards will require giving directors less material”)
A call to arms to fix corporate culture (assess culture and governance, identify problems, deal effectively with problems, set the tone from the top, ensure ongoing and robust reviews)
Remuneration and Incentives tell staff what the company values
Best interests of a company is not a binary choice between the customer and shareholders
Commissioner Hayne offered the following practical wisdom/principles to guide a review of ethics and conduct for boards and business leaders;
Obey the law
Do not mislead or deceive
Be fair
Provide services that are fit for purpose
Deliver services with reasonable care and skill
When acting for another, act in the best interests of that other
Practical Wisdom and the role of leaders
Wisdom, knowledge and experience are required for leadership and managerial decision making in; goal setting and an integrated view (including an ethical, moral and societal view), pricing policies (fair & equitable outcomes, supporting strategy (grounded in data plus context), budgeting (dealing with uncertainty, unpredictability, models and assumptions), leading through crisis (need for eco-system thinking) staff wellbeing ( the individual needs and the common good), strategic partnership balanced scorecards (ability to see through conflicting scores at what is really important in relationship).
Leadership should not wait for a crisis, for revenues and budgets to go off-track to engage the wider views. Pandemic of 2020, has been a great example of leadership teams who have been forced to stop, listen and reach out across their ecosystem (customers, employees, suppliers, relationships with banks and government) and to re-invent and re-imagine themselves.
Often when things start going wrong, there is an inclination is to either make more rules to prevent certain outcomes occurring or to put in smarter incentives to encourage the right outcomes. Practical Wisdom can be a guide when many conflicting rules appear at odds with the underlying principle & enterprise strategy (see Starbucks example).
““The problem with a rule-book based approach is that it actively undermines practical wisdom. When people become used to complying with policies, they stop thinking for themselves. This is probably in part behind the terrible incident at a Starbucks in Philadelphia when a manager called the police to remove two black men. Racism was clearly a factor, but the incident began when the manager refused to allow one of the men to use the restroom, in accordance with company policy that they were for customers only. Had the manager followed the principle of hospitality, which should be at the heart of the coffee chain’s ethos, rather than one of its policies, the situation would probably not have escalated””
Practical Wisdom and desirable characteristics of individuals and teams
How might your organisation better consider virtues and practical wisdom in the recruitment of individuals, the building and binding of teams, project sprints or cross functional collaborations?
Practical wisdom would be demonstrated in the masterful blending of knowledge and experience, an understanding of both the specific context of a situation and a wider more integrated perspective, wisdom and action. The ability of individuals and teams to work for the common good and do the right thing at the correct time because it is the right thing to do, suggests a balance: a challenge of group-think and dominant assumptions, awareness of limitations and willingness to seek inspiration externally, ensure cognitive diversity and balance creativity/breaking through thinking with obedience to rules and resistance to change.
Yet, nurturing practical wisdom may even appear add odds with our enterprises and societies which are becoming more complex and interconnected, more specialised, more bureaucratic with rules, regulations and letter of the law compliance focus. It is balance to be found for each sector and enterprise (see Timpson example).
“UK key-cutting and shoe-repair chain Timpson; “Under founder John Timpson’s principle of “upside down management”, all staff are authorized to do whatever they judge is necessary to give the customer the best experience. This empowers everyone in the organization to think about how to do the right thing on a daily basis and never hide behind the policy book. The company does have some specific policies, too, but these reinforce rather than replace the emphasis on principle.””
Practical Wisdom and thinking about data and analysis
In 1973, Clifford Geertz, an anthropologist characterised his field notes and data as a “thick description” which was a multi-faceted examination of human behaviour (facts) plus how it related to the deeper cultural context. The aim was to observe, record, analyse and interpret a “thick description” to gain a deeper understanding and meaning.
Practical wisdom may be applied to your data in the steps you take to understand the enterprise strategy and desired outcomes (What do you want to achieve? Be direct and specific), How you engage across business to understand the source of data, cost/benefit and data integrity, whether any recent material changes in technology, enterprise practices, calculation or collection of time series of data. A constant reflection on choosing meaningful metrics, ask yourself “how do I know that” and “why is that important?”. The willingness to sense-check data analysis with subject matter experts, review lessons learned from prior errors, periods or external eco-system or industry benchmarks.
https://www.marketingweek.com/adidas-marketing-effectiveness/
““Adidas is on a journey to shift from marketing efficiency to marketing effectiveness, admitting a focus on ROI led it to over-invest in digital and performance marketing at the expense of brand building.” ….
Wrong metrics “ led Adidas to over-invest in paid search ….. an error it uncovered in its Latin America market when a breakdown at Google AdWords and therefore inability to invest in paid search didn’t lead to a dip in traffic or revenue coming from SEO.””
The purpose of an enterprise is evolving rapidly and is no longer just to “maximise shareholder value” declared the Business Roundtable in 2019. In 2020 CEO Larry Fink of Blackrock informed clients of a new ESG standard: “making sustainability integral to the way we manage risk, generate alpha, build portfolios, and pursue investment stewardship, in order to help improve your investment outcomes”. In 2020, the Pandemic forced business to re-examine and re-imagine themselves. As these trends continue there is a need for something fresh and new (or perhaps revisit something rather old).
Practical Wisdom; making sense of the eco-system is a “secret sauce” for individuals, teams , management and enterprise. As a way’s of working and thinking, it remains highly relevant today. Read deeply, reflect, listen, build cognitively diverse teams, collaborate and play it forward. Whiteark is here to assist.
“ “Virtue makes us aim at the right end, and practical wisdom makes us take the right means””
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Article written by Mark Easdown
