Wisdom in Organizations: Whence and Whither

David Rooney & Bernard McKenna

AbstractWe trace the genealogy of wisdom to show that its status in epistemological and management discourse has gradually declined since the Scientific Revolution. As the status of wisdom has declined, so the status of rational science has grown. We argue that the effects on the practice of management of the decline of wisdom may impede management practice by clouding judgment, degrading decision making, and compromising ethical standards. We show that wisdom combines transcendent intellection and rational process with ethics to provide a balanced and integrated way of knowing, deciding, and acting for managers in a complex and uncertain business environment. Finally, we discuss the role and value of wisdom across a range of business functions including knowledge management, strategic management, leadership and international business.

Keywords: practical wisdom, genealogy, management, knowledge, epistemology, ethics

David Rooney is Senior Lecturer in Knowledge Management in the UQ Business School, University of Queensland, Brisbane, Australia. His recent books are The Handbook on the Knowledge Economy (Cheltenham: Edward Elgar, 2005) and Public Policy in Knowledge-Based Economies: Foundations and Frameworks (Cheltenham: Edward Elgar, 2003). David can be contacted at d.rooney@business.uq.edu.au

Bernard McKenna is Senior Lecturer in Business Communication at the UQ Business School, University of Queensland, Brisbane, Australia. His diverse research publications deal with critical discourse theory and analysis, communication theory and practice, as well as wisdom. He is on the Advisory Board of the Journal of Technical Writing and Communication and Critical Discourse Studies. Bernard can be contacted at b.mckenna@uq.edu.au.

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Knowledge and Wisdom, far from being one, Have ofttimes no connexion (Cowper 1784).

Illumination of the intellect, together with charity inflaming the heart, constitute the gift of wisdom (Manning 1875).

In the twenty first century there are more knowledge, technology,

technologists and experts than at any time in human history. It has also been reported

that average IQ continues to increase (Sternberg 2003). From a global perspective, it

is difficult to argue that this accumulation of intelligence, knowledge, expertise and

technology has put the world in an unambiguously better position than it was 50 or

100 years ago. Political and economic forces have contributed to the proliferation of

weapons of mass destruction, and also to massive environmental degradation. Apart

from these global issues, business, public services, and individuals seem to

continually produce crises. Business enterprises continue to produce stories of

corporate collapses due to greed, limited vision, and poor judgement. Public services

are often represented in the media as inefficient bureaucracies despite their

contribution to the common weal, especially in education, health, and transport. At the

individual level, social anomie and issues of work-life balance contribute to stressed

and alienated people. Of course, every age has its doomsayers, and it is not the

purpose of this paper to contribute to a pessimistic world view. Rather, it is to make

the point that increased knowledge does not necessarily beget enhanced lifestyle and

human happiness.

There is little doubt that the world is increasingly beset with a moral,

ontological and epistemological malaise. This post-modern condition is characterised

by moral, ontological, and epistemological relativism that prevail at the expense of

certainty, stability, and truth. In a sense, this is the price that complex societies pay for

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diversity, democratized relations, tolerance, and the acceptance, even encouragement,

of change.

The rise of knowledge-based economies is seen by some as a response to the

‘risk society’. For example, van Loon (2000) claims that the imperative for generating

more and more (technological) knowledge and expertise is a response to over

sensitivity in perceiving risk. Paradoxically, this risk society view can mean that the

more knowledge we call on to deal with risk the more risks we create, which in turn

leads us to call for more knowledge in an infinite regress. This knowledge-based

approach is a path to entropy so long as answers to the world’s problems are

considered only in terms of developing increasingly complex epistemic structures of

knowledge. We argue that although maintaining, processing, and building declarative

knowledge is important, doing so in the absence of sufficient wisdom can be

ineffective, even dangerous. This paper argues that wisdom can help address the

problems of postmodernity outlined above and seeks to stimulate a change in

discourse so that wisdom can be more readily spoken of in management by

highlighting its practicality.

So what is Wisdom?

What is wisdom comprised of and what is a robust conceptual framework that

clearly defines wisdom and identifies what processes are involved in it? We present

five wisdom principles that have been distilled largely from the Aristotelian

philosophical tradition (for a detailed discussion see Rooney and McKenna

forthcoming) but is also informed by contemporary research.

The five principles are that wisdom is:

1. Based on reason and observation

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1a. It makes careful observations to establish facts and logical deductive

explanations.

1b. It evaluates the salience and truth-value of logical propositions when applying

reason to decision-making using clear understandings of ontological categories

that theoretically describe substance, process and quality to demonstrate,

through logical argument, correct conclusions.

2. Inclusive of non-rational and subjective aspects of human experience

2a. It acknowledges the sensory and visceral as important components of decision-

making and judgment.

2b. Wisdom has a metaphysical, even spiritual, quality that does not bind it

absolutely to the rules of reason.

2c. It respects and draws upon experience and tradition as a means of apprehending

who and what we are through personal insight.

2d. Because wisdom understands the contingency of life and circumstance, and the

constructedness of phenomena in a spatio-temporal location, it is not reducible

to method.

2e. Wisdom is visionary because it can ‘see’ possibilities in the future, and is

cognizant of long-term and of strategic conditions.

3. Directed to humane and virtuous outcomes

3a. Because it is humane, wisdom is virtuous and tolerant through empathy and

interpersonal insight.

4. Practical

4a. It is prudent and practical, displaying a sensible worldliness.

5. Articulate, aesthetic and intrinsically rewarding, and incorporates emotion

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5a. It is able to articulate judgments aesthetically and acknowledge the intrinsic

rewards and pleasures of knowledge and contemplation for their own sakes and

brings about harmony and happiness.

5b. Emotions (feelings) and their corresponding passions (commitments and drives

to act) are significant in wisdom. Anger at injustice and passion or love for

humanity, for example, can guide and motivate one to speak and act for the

good.

These philosophically derived principles are largely confirmed by

contemporary psychological research that, briefly stated, says wisdom is that which

coordinates, integrates, weighs and balances knowledge and judgments about the

‘fundamental pragmatics of life’ (Baltes & Staudinger 2000: 132). In particular, the

psychological work of the Berlin School (e.g., Baltes & Dickson 2001; Baltes and

Kunzmann 2003; Baltes and Staudinger 2000; Baltes, Staudinger, Maercker, and

Smith 1995; Staudinger, Lopez and Baltes 1997; Staudinger and Pasupathi, 2003) and

of Sternberg (1990, 1998, 2003) support the principles. These contemporary

researchers shed light on wisdom in the context of personal development as people

move through the human life cycle and in terms of methods for conducting empirical

research on wisdom.

Our principles have four major implications for management. Firstly, wise

people have ‘insight into the social nature and incompleteness of human existence, the

variability of life goals, knowledge about oneself and the limits of one’s knowledge,

and insight into how knowledge is translated into behaviour’ (Staudinger and

Pasupathi, 2003: 240). Secondly, a salient predictor of being wise, according to

psychological research, is being able to move ‘beyond existing rules and being

tolerant of ambiguous situations’ (Sternberg 1996). Thirdly, wisdom is a way of

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being rather than an accumulation of knowledge, an elevated IQ, or simply an

application of technical rationality. Fourthly, the transcendent or imaginative

intellection that goes beyond rational and systematic intellection (science broadly

defined), must be founded on ethics. Wisdom strikes the difficult balance along these

dimensions for the good of the individual and society: not an easy task.

For some, the notion that wise people must loosen their hold on ‘objective

facts’, established routines, and rationality in order to better adapt to our complex

environment will be difficult to accept. Yet, few would argue with the proposition that

we cannot possibly apprehend, intellectually, the full extent of reality, even a small

part of reality such as managing a business in a particular industry. As well, the notion

that humans are boundedly rational, as Simon (1955) has argued, is well accepted.

This is what helps to define our humanity. In fact, evolutionary epistemologist,

Donald Campbell (1974), claims that while these epistemic, cognitive and ontological

limits have been a feature of human evolution, evolution has been kind to us in

enabling humans to develop capacities to transcend limited facticity and rationality.

Imagination, creativity, and insight are what we have evolved within us to make the

best of these limits. These transcendent capabilities are also part of the core of

wisdom. In a profound study of human consciousness, Gebser (1985) lends support to

the Campbell thesis claiming that the core of human consciousness, the very engine of

human knowing, is a highly tacit mental capacity that is founded on a non-verbal,

instinctive, felt way of knowing rather than explicit knowledge and rational cognition.

These are vital components of what we call wisdom. Furthermore, although it may

seem odd to modern civilization, rationality has been seen as problematic for wisdom

because it can act as the basis for the savant and the fool.

The Savant, the Fool, and the Ignoramus

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The practical perils of knowledge in the absence of wisdom and the under-

estimation of the transcendent engine of the human mind have been known for a long

time. Giambattista Vico, an eighteenth century Aristotelian, provides an effective and

timeless taxonomy of four managerial types that can be applied just as well to

commercial, governmental and institutional managers, and professionals dealing with

the technical, economic, legal and administrative complexities of contemporary life.

These four intellectual types are the imprudent savant, the fool, the astute ignoramus,

and the wise person.

The imprudent savant (doctus imprudentis) lacks nuance and empathy

approaching ‘ethics as though it were a manual of propositions to be memorized;

makes decisions slowly, is arrogant; and has a lack of persuasive communication’.

The savant moves ‘in a straight line from general to particular truths’ in order to

‘burst through the tortuous curves of life’ (Miner 1998: 57). Sometimes successful,

they more often fail. The fool (stultus) ‘lacks knowledge of either the general or the

particular’, and so ‘constantly pays for his [or her] rashness’ (Miner 1998: 56).

Although the astute ignoramus (illiterates astutus) knows how to succeed in worldly

affairs, s/he lacks phronesis [reflexive humane wisdom]. Thus ignorance of the most

important things, as evidenced by constantly preferring utility over what is right,

ensures failure in the most important matters (Miner 1998: 56). Because wise people

(sapientes) have practical and theoretical wisdom, ‘through all the obliquities and

uncertainties of human actions, [they] aim for eternal truth, follow roundabout ways

… and execute plans which in the long run are for the best, as far as the nature of

things allows’ (Miner 1998: 56).

Many will recognize a patina of familiarity in these four types. They may have

worked with people who fit one or more of these descriptions. Readers will also

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recognize that the first three types are all unwise and undesirable in managing a

complex business in a complex environment. Vico was responding in the eighteenth

century to what Benedict (2001: 27) characterises as the ‘New Science’ and its lack of

regard for Aristotelian logic, and its unbalanced esteem for experiment and

demonstration at the expense of insight and judgement. The lineage of this New

Science, which Maxwell (1984) has so thoroughly critiqued, is manifest in the

technocratic rationality found in much of today’s business and government procedures

— although by no means all (Sturdy: 2004) — and in the utilitarian credentialism that

characterises much university training for management. This technocratic rationality

is supplemented by and infused with neo-classical economic rationalism (McKenna

and Graham 2000). As well, isomorphic tendencies in organizations working in

shared environments (Di Maggio and Powell 1983; Newman and Nollen 1996; Dacin

1997) produce coercive, mimetic, and normative forces that limit the capacity for

these organizations to respond effectively and intelligently to changing circumstances

(McKenna, Rooney and Liesch 2006). We argue that these tendencies — technocratic

rationality, economic ideology, and isomorphism — unfortunately produce the right

environment for managers who fit Vico’s description of the imprudent savant and the

astute ignoramus to flourish. It is easy to say that we want to encourage the wise

manager or leader (see Kotterman 2006 for discussion of management versus

leadership), but it begs the question of the nature of wisdom. While wisdom has been

acknowledged as critical to management (Boal and Hooijberg 2001; Bigelow 1992;

Kriger and Malan 1993; Malan and Kriger 1998; Ludema, Wilmot and Srivastva

1997), it is an alternative to the modernist or technocratic management orthodoxy, one

that has not yet been seriously pursued by management researchers. Indeed, despite its

obvious value, wisdom, as a concrete concept, is largely missing in business and

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knowledge discourses (cf. Rooney 2005). It is therefore a way of being or conducting

oneself, rather than a set of abstract concepts, that is undervalued and poorly

understood (McKenna 2005).

Where did Wisdom Go?

Why has the word ‘wisdom’ gone missing from mainstream organizational

discourse for so long? Pleasingly, the word is now increasingly used in leadership and

organizational literature (Bierly, Kessler and Christensen 2000; Boal and Hooijberg

2000; Brown and Starkey 2000; Korac-Kakabadse, Korac-Kakabadse and Kouzmin

2001; Ludema, Wilmot and Srivastva 1997; Srivastva and Cooperrider 1998; Vaill

1998; Weick 2004; Whittington, Pitts, Kageler and Goodwin 2005). This fact

notwithstanding, it has been observed that wisdom as we have described it has over a

long period declined in discourse generally (Osbeck and Robinson 2005). Historical

forces have intervened between the classical age of ancient Greece and the present to

construct an inadvisably narrow understanding of the application of wisdom that

regards it to be confined to religion, art, and folklore (Freeman 2003), and in

opposition to knowledge, science and rationalism. Robinson (1990) suggests that this

is a less than optimal situation because science in coming adrift from wisdom, has led

to wisdom being seen as a corrupting influence from an archaic metaphysics. This

shift is relevant to contemporary intellectual practices in highly complex

environments because, although highly specialized scientific approaches might bring

clarity, this specialized clarity can be deceptive. That is because the separate branches

of knowledge are not designed to reveal a larger, coherent reality, whereas wisdom is

holistic, thoughtfully and sensibly connecting the different branches

(Csikszentmihalyi and Rathunde 1990). Re-incorporating wisdom into managerial and

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organizational discourse will yield important insights about how to do things

differently in the future and about how to re-invigorate our assessment of what we do

and how we work at the ideational level of business practice. Of course, we are not

saying that wisdom has not been present in managers and entrepreneurs: people in all

walks of life are able to and do exhibit the characteristics of wise practice. Instead, we

argue that wisdom has lost credibility and prestige relative to science, rationalism and

method in modern times. In other words, the story of the social life of wisdom in

history highlights its value and the costs of passively or actively disregarding it.

Genealogy of Modern Technocratic Organization

Modernity is the outcome of several convergent historical developments,

particularly in science, economics, administration, and industrialisation. It borders on

conceit to attempt to portray these economic, philosophical, technical, and business

developments in Europe and the USA in a few paragraphs. However, we need to

briefly outline the genealogy of the context within which contemporary management

practice has been shaped to better understand the absence of wisdom from the

discourses of contemporary organizations. By genealogy, we mean ‘the union of

erudite knowledge and local memories which allows us to establish a historical

knowledge of struggles’ (Foucault 1980: 83). As Lemke (1995: 30) states,

interdiscursive relations ‘determine what sorts of discursive objects (entities, topics,

processes) the discourse can construct or talk about,’ and, as a result, ‘tell us what the

alternative kinds of discourses are that can be formed in these ways and how they can

be related to each other as being considered equivalent, incompatible, antithetical,

etc.’.

Essentially, in this section we put the case that the historical conditions

occluding wisdom from both scientific and organizational discourse were the outcome

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of a confluence of factors, each with differing origin points and evolutions. From the

Enlightenment came ‘value free’ empirical science; from Protestantism came social

utilitarianism; from the secular liberalism of J.S. Mill and, ironically, Adam Smith

came an incipient economic rationalism and a view of humans as homo economicus;

from mercantilism came the need for increasingly complex government and business

administration developing into modern bureaucracy; from the new capitalist order

came the need for a calculable legal system and risk minimization strategies; and from

the Industrial Revolution came the normalization of disciplined regularity and order in

the production process; and, of course, such management practices were reinforced

through business education and the orthodoxy of scientific management. The

combined effects of the Renaissance, Scientific and Industrial Revolutions, we claim,

produced epistemological and axiological changes that facilitated contemporary

business discourse and practice. In short, the rationalist principles of the modern

scientific tradition valorised the rational processes of the mind, and distrusted the role

of the body’s instincts and feelings, which we identify as crucial to wise practice.

To better understand this genealogy we discuss, first, science epistemology

discourse and the interplay between it and the liberal discourses of trade, economics

and administration, and, finally, the discourses of twentieth century corporate

administrative epistemology.

Science, representing secular ‘truth’ from the sixteenth century, valorised

detail and value-free empiricism (Burke 2000: 204-6) to sensibly distinguish it from

theistic ‘truth’ based on faith and revelation. Knowledge came under increasingly

empiricist and objectivist epistemic and ontological influences from the time of

Bacon, who opposed speculative philosophy. From then on, as empiricism began to

grow, Aristotelian intellectual balance and wholeness was increasingly undermined.

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Thus, while Descartes’s rationalism allowed for intuition it was, nevertheless,

sceptical of the efficacy of sensory knowledge. Going further, Hobbes and James

Harrington, who condemned what they disparagingly called ‘priestcraft’ (Burke 2000:

211), contested the epistemic efficacy of the metaphysical realm, mostly dominated

by doctrinal faith, with empirical world-views, in the context of an uneasy, sometimes

violent, rivalry for intellectual legitimacy between church and science. As this rivalry

abated, the positivist foundations of science nonetheless remained intact. Advocates

of rationalist science had an important (even if unintended) role to play in the reduced

status of wisdom. John Stuart Mill argued that these transcendent modes of knowing

were not to be trusted at all, and that there could be no a priori knowledge (Robinson

1990). Nineteenth century positivism, particularly influenced by Comte in both

natural and social sciences and Ernst Mach, the instrumentalism advocated by

Poincaré, and – according to Oldroyd (1986) – even American pragmatism (e.g.,

Charles Peirce), all contributed to an orthodoxy about appropriate knowledge and

methodology that were antithetical to Aristotelian wisdom principles.

Suffice it to say, despite the rationalist genealogy in which both Mill and

Aristotle are unambiguously embedded, Aristotle would not have accorded Mill’s

narrow epistemic claims, and in particular his denial of intuition, any credence. By

excluding wisdom, Millian epistemology blurred the boundary of knowledge and

information. In Aristotelian terms, it radically impoverished thought in important

domains of human activity. However, in the twentieth century, science retreated from

the Millian extreme at some levels. Indeed, Einstein re-aligned himself in 1934 with

the Aristotelian tradition when he stated that ‘the creative principle resides in

mathematics. In a sense, therefore, I hold that pure thought can grasp reality, as the

ancients dreamed’ (Oldroyd 1986). Einstein’s New Physics of relativity, and the work

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of Popper and Kuhn, admittedly intellectual opponents, significantly altered orthodox

scientific methodology and the philosophy of knowledge in the twentieth century.

However, this change was not uniform. During the twentieth century two areas

showing some reluctance to embrace these changes were psychology and scientific

management, characterised by rationalist methodology and its concomitant

assumptions about knowledge, and instrumental positivism. Of course, in psychology,

the behaviourists, Frederic Skinner and Clark L. Hull, were the most forceful

representatives of such an approach, which was quick to ‘objectively’ operationalize

and measure1. We now know that the outcome of such scientific conceit was often a

deeply inhumane treatment of those who were psychologically or intellectually

vulnerable. Twentieth century scientific management, and its sub branches such as

operations management, also adopted positivist and instrumentalist methodologies,

although it must be acknowledged that the intentions in many cases were not

inhumane, as is seen in the work of Henry Gantt, Mary Parker Follett, and even F.W.

Taylor.

Capitalism and modern business administration methods and their attendant

epistemologies cannot be understood without acknowledging the influence of

changing religious doctrine and political axiology. Aquinas, in the Catholic tradition,

drawing on Aristotle, saw trade as almost a necessary evil, and a practice that must be

guided by a ‘just price’ (Roll 1992: 33-34), although this position was contested

within the Church (e.g. Eck). Clearly such principles were going to become obsolete

in the changing circumstances from the Age of Discovery. Protestantism, particularly

Calvinism, was a more appropriate ethic for an emergent merchant class (Weber

1958) from the age of mercantilism to the Classical era (Roll 1992)2. Calvin

‘repudiated the Aristotelian doctrine that money was infertile’ (Roll 1992: 38;

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Tawney 1947). The Protestant merchant class came to measure virtue by utility and

efficiency in achieving material ends (performed while invoking the name of God). In

practice, virtuous acts were determined by their predicted and calculated

consequences in the here-and-now (Harrison 2003). In this way, a Puritan social

utilitarianism began to manifest in, among other things, diligence and industry, as

well as a profitable education founded on an applied, utilitarian, functionalist

curriculum that did not waste time on art and philosophy to promote material

wellbeing and improve man’s ‘dominion over nature’ (Merton 1938: 55-73). In the

secular realm, it might be argued that Machiavelli, a contemporary of Calvin,

contributed to an emerging confluent philosophy. That is, if conceived as perhaps the

original managerialist, he replaced the transcendental, deontological ethic with a

secular consequentialism, raising technical knowledge above metaphysics to

determine worldly affairs in public administration. This modernist and expedient

ideology asserted: ‘it is necessary for a prince, who wishes to maintain himself, to

learn how not to be good, and to use this knowledge and not use it, according to the

necessity of the case’ (Machiavelli 1950: 56). Rational utility had been elevated to a

political philosophy by Machiavelli. This confluence of rational epistemology and

utilitarian administrative practice became ideology once liberals such as Locke, von

Humboldt and Mill applied their minds to it.

Of course, J.S. Mill was as much a liberal as a rationalist. Secular liberalism

was originally characterised by the three articles of faith, ‘life, liberty, and property’,

(Locke 1947). Liberty is the natural and most productive political state, Locke argues.

By exercising our liberty, we produce property, which is the basis of a growing,

wealthy, and productive community. Mill’s (1968) On Liberty advocates ‘the free

development of individuality’, arguing that it is ‘one of the leading essentials of well-

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being’ (Mill 1968). In making this case, Mill asserts that there is not only a ‘freedom

from’ tyranny, but also a ‘freedom for’ spontaneity and originality. Thus, there is a

paradoxical dissonance between the aesthetic individualism needed by societies to

progress and develop, according to Mill, and the stifling conformity that his

rationality imposed on scientific work. Today we see this paradoxical dissonance in

the parallel managerial discourse claims that represent entrepreneurs as those who

‘commence new practices, and set the example of more enlightened conduct’ (Mill

1968), but place them within the strictures of scientific managerialism. Sennett (1997)

refers to this as Smith’s Paradox.

With the liberty to pursue life, liberals argue, those who are most purposeful

will want to better their condition thereby enhancing prosperity (or ‘property’). This

was most forcefully proposed before Mill in Bentham’s utility theory:

By the principle of utility is meant that principle which approves or

disapproves of every action whatsoever, according to the tendency which it

appears to have to augment or diminish the happiness of the party … . I say

of every action whatsoever; and therefore not only of every action of a

private individual, but of every measure of government.

(Bramsted and Melhuish 1978: 295)

As nineteenth century liberalism wrote the justification for capitalism in the emerging

industrial age, it did so from an increasingly utilitarian perspective (Merquior 1991),

based more on Bentham’s writings (and James Mill to a lesser degree) to the extent

Adam Smith’s ‘invisible hand’ metaphor was divested of its moral fabric (Smith

1776/1986: Vol 1, 400; cf Evensky 2001) until in the twentieth century his ethical

ideal was lost to a values-free, ‘let the faceless market decide’ political economy that

occluded wisdom from economic decision-making.

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Importantly for the possibility of wisdom in market economics discourse,

Smith, contrary to popular opinion, believed that, as humankind moved from a ‘rude’

state to a ‘mature’ state, we moved closer to the ideal, governed by humane principles

as outlined in his Theory of Moral Sentiments (Smith 1761/2002). However, Smith’s

concern to locate and articulate the ‘moral sentiments’ to justify an economic system

based on individualistic self-interest — was lost or ignored. Veblen (1899: 411)

asserts that ‘After Adam Smith’s day, economics fell into profane hands, because

‘[a]part from Malthus the next generation do not approach their subject from the point

of view of a divinely instituted order’. Veblen concludes that, ‘while Malthus may

well be accounted the truest continuer of Adam Smith, it was the undevout utilitarians

that became the spokesmen of the science after Adam Smith’s time’. By the late

nineteenth century, economic theory is based on rationalist assumptions about homo

economicus, eschewing questions of morality and humanity generally to create a

mathematical science of wealth and ownership. Veblen (1899) describes the path that

led from classical to neo-classical economics, or from economics as moral philosophy

to economics as a decontextualized mathematical science with implied liberal

assumptions that was said to be value-free.

In summary then, classical nineteenth-century liberalism supplanted the

Calvinist tradition by maintaining the individualist ethic, but establishing a utilitarian

functionalism to govern the increasingly managed industrial age, reaching its

apotheosis in Fordism and Taylorism. Orthodox business and economic capitalist

thought centred on self-regulating market mechanisms, and using a Newtonian

mechanical metaphor, replaced a humanistic system largely founded on reciprocal

community relations (Polanyi 1944). The effect of this economic thought and practice

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was to move virtue away from being transcendent and unworldly towards being

individualistic, materialistic, mechanistic, functionalist, and utilitarian.

An Administrative Epistemology

Finally, we need to consider in more detail how the functional and mechanistic

aspects of this logic were transported to the realm of government and business

administration. There was an increasing need to impose order on an unprecedented

dynamic and complex society where a growing population, nationhood, and a

mercantilist-based economic growth led to the need for higher orders of organization

(Crosby 1997). Courtesans and courtly officials were being replaced by a definable

bureaucracy that, says Weber (1978), controlled information and knowledge through

regulation and formal process. This early bureaucratic tendency is seen, for example,

in the administration of the Catholic Philip II of Spain, who became known as ‘the

king of paper’ because of his propensity for generating paperwork to better run the

state (Burke 2000: 119). Although capitalism is associated with enterprise and

individualism, Weber points out that modern rational capitalism also has a need ‘not

only for the technical means of production, but of a calculable legal system and of

administration in terms of formal rules’ (Marshall 1982: 25). These calculable and

technical elements of law and administration contributed strongly to the necessary

conditions of modernity; they also helped to shape business behaviour into the

normative patterns evident in late-industrial capitalism. In such conditions, wisdom

discourse that allowed for intuition and non-rational practices was incommensurate

with the administrative and managerial discourses that privileged empiricism and

ordered workplace behaviour (as Weber described). Because bureaucratic and

technocratic managerialism regarded the enigmatic side of intellection as lacking

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reason, it was considered undesirable, unreliable, and unproductive (Weber 1958).

Consequently, as technique rather than transcendence was to be the mark of good

administration, the essential tension between the worldly and the practical versus the

intuitive and the transcendent so valued in the Aristotelian tradition was denied.

As the distance, volume, complexity, and size of financial transactions

increased, one of the understandable goals was to hedge against the risk attached to

long distance and international trading3. Bills of exchange and promissory notes were

developed as risk management techniques (Crosby 1997). The double entry

bookkeeping system, which began in 1494, changed the ‘abstraction’ of profit into a

definite form, thereby diminishing the subsistence mentality of medieval business

(Nussbaum 1937: 160). This growing concern for certainty and clarity to diminish

risk in an increasingly complex economy was dealt with by an incipient form of

rational scientific business management method.

By the nineteenth century when industrial capitalism was developing in

Britain and the U.S.A., industrial practice established the ‘moral primacy’ of work in

American discourse (Rodgers 1974: xii), underpinned by an unshakable belief in the

virtues of regularity, order and discipline that had been valued in European industry

since the Industrial Revolution (Rodgers 1974: 14). The inflexibility of such order

was not particularly accommodating of the creative and speculative mind (Rodgers

1974: 77). Indeed, Bendix (1956) observed that the typically hierarchical authority

relations and bureaucratization seen since the industrial revolution, threatened

individual initiative and were still at the core of management ideology during the

1950s.

The epistemological and axiological assumptions that underlay the emergence of

contemporary capitalism also infused its management practices. We do not argue that

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these practices are homogenous or that they do not vary over time: Barley and Kunda

(1992), for example, provide an excellent historical account of the undulations of

American managerial discourse from the 1870s to the late twentieth century. Instead,

we propose that rationalist technocratic discourses continue to strongly infuse our

managerial practices. This discourse has a technocratic, functionalist and

instrumentalist view of knowledge (Fuller 1988; Graham and Rooney: 2001), and of

science and technology (Fuller 1988; Saul 1992). Thus, knowledge management

practice is based on an inadequate theorization of knowledge (Blackler 1995; Stacey

2001) as it is based on a need to measure knowledge, exploit intellectual capital, and

use computer-based knowledge management systems. The primary function of

modern technocratic discourse has been to ‘rationally’ organize an aspect of the

universe according to an institutionalized and formalized knowledge, which is highly

privileged within the social heteroglossia (Lemke 1995: 76) of managerial theory and

practice. This discourse orients us to seeing the world in particular ways, rationally,

epistemologically, and normatively (Beyer and Niño 1998; Trice and Beyer 1993). It

does this primarily by divesting certain forms of social practice of their social, ethical,

political, and moral values, thus rendering their discourses as ‘objective’, value-free

truth (Saul 1997). In such conditions, wisdom discourse is marginalized.

In other words, the discourse of management theory almost always

incorporated the ‘objective’ discourse of science. This discourse coincided with the

emergence of managerial capitalism and the managerial class (Chandler 1977). By

World War I, this new class of professional, technically-oriented specialists engaged

in scientific management were primarily concerned with control, coordination,

routinizing business processes, and designing organizational structures. The epistemic

and axiological narrowness of these modern management practices, we argue, left

19

little or no room for Aristotelian wisdom and transcendence. Furthermore, managed

capitalism became increasingly detached from a sense of reciprocal community

(Polanyi 1944) because, says Sombart (1916: 37), ‘depersonalization’ of property and

labour relations ‘was [thought to be] necessary before these actions could be geared

solely to profit’. Two applications of this management approach are evident in

twentieth century Human Resource Management, or worker relations, and business

education.

The role of the worker in management theory provides an insight into the

limits of wisdom in twentieth century organizations. In the early twentieth century,

the mental hygiene and human relations movements saw the ‘human being as a

productive force that should be utilized efficiently in the light of a knowledge of its

modes of activity, its capacities and its aptitudes’ (Miller and Rose 1995: 431). It used

‘psychotechnics to optimize the utility of the worker as a psycho-physiological

entity’. At this point, the worker became ‘the object of a scientific knowledge and

[was] subordinated to a logic of efficiency. Both Taylorism and humane approaches

sought to advance national efficiency through the application of science and rational

technique’.

There were, of course, humanist approaches to management of the workforce.

For example, the human relations movement in the 1930s led by Elton Mayo

encouraged management to see the ‘worker’s innate need for belonging to be met

through the active construction of a strong sense of work-group identification’

(DuGay 1996: 9). Later, British industrial social scientists, such as J.A.C. Brown and

G.R. Taylor, who incorporated the American social psychology of Gordon Allport,

Kurt Lewin, and the Chicago School of sociology linked productivity with

democracy, ‘recognizing the democratic citizenship of the individual worker’ (Miller

20

and Rose 1995: 437). However, in the UK during the 1950s, calls for workplace

democratisation were abandoned when the worker was reconceptualized as ‘a rational

economic actor, not looking for pleasure or social values in work, but merely seeking

to maximise the financial returns provided by employment in order to satisfy desires

located in the work of leisure, family, and home’ (Miller and Rose 1995: 438).

Similarly, the ‘industrial democracy’ project that began during the 1960s in Norway

and developed in the West through the work of the Tavistock Institute (See Miller and

O’Leary 1994; Emery and Thorsrud 1976), and which encouraged job enrichment,

autonomy and self management (Miller and Rose 1995: 444; see also Herrick and

Maccoby 1975), gradually disappeared from industrial relations practice, particularly

as cost-cutting layoffs and transfers to low-wage economies became standard from the

late 1970s onward. In its place, a new calculus linking the ‘enterprise’ of the

individual and the organization emerged (Rose 1988; DuGay 1996).

While American business schools had only marginal impact on business

practice for the first half of the twentieth century, two contemporaneous assessments

of U.S. business education in the early twentieth century help track the demise of

wisdom from the pedagogy of commerce and industry. Jones (1913) in an important

report on business education paid little more than lip service to the benefits of liberal

study and espoused a highly functionalist and utilitarian curriculum for American

business schools. For Jones, business education should focus on knowledge about

authority and responsibility, rules of co-ordination and division of labour, standards,

schedules and sequence, rewards and punishments, accounting and precision, and

methodology for investigation. In the same year, Kendall (1913: 593), argued that

management in manufacturing should be utilitarian, being concerned with accounting

21

and costs; purchasing; storage of materials; execution of the work; and worker

efficiency.

These calls for instrumental bases to management education were critiqued by

Marshall (1917) and Thompson (1914) in America, while Fehling (1926: 560) and

Longobardi (1927) produced similar European critiques. Each of these commentaries

noted the functionalist slant and questioned the wisdom of eschewing a humanistic

foundation to business education. An uneasy tension between the values of a liberal

Arts education and vocational training was becoming more evident in the U.S.A. (and

elsewhere) by the mid twentieth century. For example, James C. Worthy (1955: 76)

lamented the loss of this humanities foundation in America. Reflecting on his

experience recruiting business school graduates at Sears Roebuck, he thought that

business schools had poorly equipped graduates for business: ‘One reason for this is

an undue amount of specialization and an undue emphasis on techniques’ resulting in

a good supply of experts but not of ‘statesmen’. Worthy explained this partly by

pointing out that it is easier to teach technical courses than it is to teach about ‘modern

society’ and also because the demand for graduates by business is, regrettably, biased

towards technical experts. Notably, he also argued that business schools failed to

show the kind of intellectual leadership and courage required to make wise curriculum

choices (Worthy 1955: 77). This tension is also evident in Gordon and Howell’s

(1959) report on US Business Schools that extensively considers the right balance of

technical, vocational, and humanities education. They identified a decided bias

towards the scientific paradigm, and report that half of the business schools failed to

meet the Association to Advance Collegiate Schools of Business (AACSB)

requirement of offering 40 percent non business courses (Gordon and Howell 1959:

46). More recently, Conry and Nelson’s (1989) study found that business school

22

students became less ethical through the course of their studies. Going further,

Jacques (1996: 12) argues that:

Professional knowledge, certified by the university and legitimized by

association with scientific objectivity, was the key social power relation

through which the US was restructured after the demise of nineteenth century

Federalist social institutions.

While acknowledging that today there are many critical voices and notable

processes in management practice that challenge the intellectual orthodoxy, the

objectivist discourse has ‘sedimented into an extremely powerful form of authority’

because it ‘has assumed the status of being self-evidently good and necessary’

(Jacques 1996: 12). Thus while a values-based discourse has been re-emerging in

business, wisdom is undeniably still under valued.

Our genealogy of contemporary management practice has recounted the effect

of the scientific tradition, the emergence of social utilitarianism, the development of

economic rationalism, and the normalization of bureaucracy, regularity and order,

including in production management processes. As a result, we argue, the required

non-technical attributes of wisdom—the capacity for, and habits of, reflexivity, virtue,

intuition and imagination—have been minimized in the dominant discourse and

practice of contemporary mainstream management. This account highlights the

decline in the social status of wisdom. The consequences of this decline include a

failure of social and environmental vision, a failure to integrate knowledges, and a

failure to remain open-minded as a society and as individuals. We argue that business

needs to be wiser not simply for intellectual or commercial reasons, but also for

ethical reasons, because business is a key mediator between the economic sphere and

23

the social, environmental and technological spheres. Business’s role in shaping our

futures is significant and therefore it should be a positive ethical force in constructing

the future. This may be the highest level at which business strategy can operate.

Applying Wisdom to Contemporary Times

Having now outlined a theory of wisdom and provided a genealogy of

contextual aspects of modern business practice, we now move to contemporary times.

We identify nine areas of contemporary business practice in which wisdom principles

are relevant: change; knowledge, innovation and creativity; HRM; public

administration; business strategy; international business; communication

management; intellectual leadership; and management education and research. Rather

than bemoan the human incapacity to deal with rapid change, or, worse still, attempt

to build even bigger and more arcane rationalist knowledge systems, a wisdom

approach acknowledges not only human cognitive limitations, but also the relativity

of knowledge, perception, and truth that can assist managers to judge, decide and act.

In covering these nine areas we provide brief discussion that might be considered as

triggers that promote deeper thinking and action in more specific contexts in which

wisdom and management connect.

Change, Ephemerality , and Fads

Change is pervasive in post-modern and post-industrial social and economic

systems (Tsoukas and Chia 2002), and wisdom is an excellent resource for navigating

this terrain (McKenna 2005). Managing change is widely regarded as a great

challenge, but one that is not well handled in business (Greenwood and Hinnings

1996; Seo and Creed 2002). Furthermore, faddish practices such as Business Process

Re-engineering that glibly promise cure-alls or easily digested, but ephemeral, ideas

24

for busy managers in the ‘real world’ are now notorious, even if they are still

irresistible to many. We have argued elsewhere for the benefits of socially intelligent

change (Rooney et al. 2003; Rooney and McKenna 2005), and suggest that business

people seek wise change by applying the wisdom criteria developed above to

organizational change. In particular, we argue that wisdom provides managers with

the capacity to distinguish between change as fad, frenetic rearrangement, or

management power game (Zorn, Page and Cheney 2000), and that change that is

necessary to adapt to changing circumstance or as innovation. In particular, we

suggest that a wise person asks fundamental questions about the nature of change by

considering the changing ontologies and frames of understanding upon which such

changes are predicated.

Knowledge, Innovation and Creativity

Central to the problems we raise at the start of this article is the implicit

accumulative model of knowledge that underpins much of the rhetoric of knowledge

management and knowledge-based economies. We question the logic that problems

are best solved by accumulating more and more knowledge or gaining access to more

knowledge. Instead, we assert that wise use of knowledge incorporates the ability to

question the ontological basis of knowledge, as well as allowing for insight, intuition,

imagination, and creativity to have a role. We are concerned particularly about the

puzzling gaps between what should be the overlapping fields of knowledge

management, innovation management, and creativity management. Research has

shown that managers put themselves at odds with much of the rest of society in

regarding creativity as antithetical to wisdom (Sternberg 2003). There is the

suggestion here that managers, influenced by command and control modes of work

25

and by a positivist, accumulative philosophy of knowledge outlined above, are

threatened by creativity or at least unsettled by its unpredictability. The wisdom

criteria above suggest that the transcendent faculties are interdependent with more

rational and fact-based ones, and must work in unison to produce wise practice. We

argue that a wisely knowledgeable, innovative, and creative organization is more

achievable if the key intellectual activities in them are not fragmented and instead are

seen as an integral whole.

Human Resource Management

A wise organization can be wise only because of its people. HRM is therefore

a critical element in bringing wisdom to businesses and retaining it. The loss of

‘corporate memory’ was acknowledged after workforces were ‘rationalised’ in the

1980s and 1990s (Lahaie 2005). Now the loss of ‘corporate wisdom’ has been

acknowledged by practitioners (see Hammer 2002). But what can be done in terms of

HR policy to inculcate and preserve organizational wisdom? Critical here is the place

of older workers who are frequently seen in a negative light. Hammer (2002) is one

practitioner who is concerned about the loss of older and wiser senior employees. He

shows that good senior Canadian public servants are wise enough to understand that

the antisocial conditions of work under which senior employees operate are simply

not worth it, compelling them to take early retirement. This situation suggests the

need to reform ways of thinking about these and other workers, their needs, and their

value to an organization. Unfavourable conditions of work/life balance, as Hammer

points out, may encourage wiser senior members to leave organizations, thus

rendering organizations more vulnerable to unwise management. This focus is not to

discount the value of younger workers who might also contribute to wisdom as

research shows that wisdom is not necessarily the preserve of the old (Baltes and

26

Staudinger 2000). Furthermore, we argue that wisdom in organizations is distributed

or virtual, and that different aspects of it can be found in different parts of an

organization and in different individuals who can be brought together.

Public Administration

In any economy, one of the largest, most complex, most knowledge-intensive

and important ‘businesses’ is public administration. However, it is notable that the

only major wisdom management initiative (in the public or private sectors) we are

aware of has been undertaken by the Canadian Public Service Commission and is

expressed in the report, The Getting and Keeping of Wisdom (Hammer 2002). The

report, as suggested above, explores the need for responses by the public service to

the loss of its wisest employees. Further complicating good public administration is

the inappropriate infusion of public service discourse by discourses more appropriate

to the private sector, thereby abrogating the critical role of assuring the quality of life

intended for a nation’s citizens (Wiig 2002; Brooks 2003). This is now an important

issue in public administration, as was evident when the Australian Journal of Public

Administration (2004) recently devoted a whole issue to the problems associated with

knowledge and rationality in constructing policy. In that issue, Parsons (2004), while

not directly discussing wisdom, draws on philosophical literature (e.g., Plato and

Aristotle) in ways similar to our research, invoking notions of steering, craft and

judgement, rather than science (and New Public Management). He shows how to

break free from the dominant paradigm that he describes as enforcing a restrictive

epistemology. Interestingly, Parsons questions the efficacy of relying on the ‘central

minds’ of a few experts ‘at the helm of government’. This suggests, as we do, that

wisdom should be explored not only as an individual attribute but also as a distributed

or group phenomenon. This is an important insight and it is clear that there is no more

27

important place for collective wisdom than in democratic public administration

(Korac-Kakabadse, Korac-Kakabadse and Kouzmin 2001).

Strategy and Business Policy

Although popular thought probably regards wisdom as impractical, unworldly,

and remote or esoteric, this would not have been the view of Aristotle, nor is this

perception anywhere in our characterisation of wisdom. Wisdom must be practical:

Baltes and Staudinger (2000) refer to it as a ‘pragmatic metaheuristic’. Nonetheless,

wisdom is also useful in dealing pragmatically with remote and speculative problems

such as what the future holds. In general, it could be argued that businesses are caught

between the tendencies of isomorphism (Newman and Nollen 1996) and a desire to

reduce uncertainty and transaction costs (Peng 2006; Dacin 1997). This places

intolerable burdens on management, particularly line management who are often

faced with schizophrenic demands produced by lines of management operating under

different imperatives (e.g., reducing costs by sacking staff, but also claiming to

maintain high levels of client responsiveness and care or workplace safety). Business

strategy can use wisdom principles to help achieve foresight, prescience and insight. It

can also draw on both systematic and methodically rational processes as well as

transcendent processes like creativity and imagination (cf. Stacey 1996). We argue

that strategy development can be seen as simply a process of discovery and learning.

This discovery process can be conducted according to our principles of wisdom to

create a more organic or naturalistic discovery process that values the scientific

elements of research, but equally values the transcendent to create a strategy

epistemology resembling a craft rather than simply a science (cf. Mills 1959).

International Business

28

An important area of business strategy is international business, which is

perhaps a site where the features of the post-industrial economy and post-modern

conditions operate most intensely in business. It is highly complex with great

epistemic, cultural, governance, linguistic and attitudinal variety (Newman and Nollen

1996). Yet, its own theorists acknowledge that the dominant international business

literature operates within tired paradigms (Buckley 2002). A wisdom approach, we

have argued (McKenna, Rooney and Liesch 2006), can break the mimesis of

institutional isomorphism that has been acknowledged in the practice and scholarship

of orthodox international business management. The principles of wisdom set out

above are applicable to examine specific problems in a highly complex and uncertain

international business environment (cf. Toyne and Nigh 1998). While rational

judgment is necessary, wise management also requires a capacity for ‘counter-

intuition’, vision, and humanity. In other words, wise practice can opportunistically

and ethically circumvent the discursive limitations imposed by current orthodoxy in

the turbulent, ephemeral conditions of international business and its management

(McKenna, Rooney and Liesch 2006).

Communication Management

Although it is not always given due regard, we have known about the

centrality of communication to management for some time (Barnard 1938). The

capacity to communicate effectively is an important aspect of wisdom. The vital links

between language, thought and knowledge have long been recognised (Gebser 1985;

Vygotsky 1978). Central to diffusion and application of knowledge at inter-personal

and inter-group levels is communication (Choo 1998; Heracleous and Barrett 2001;

Rooney and Schneider 2005;Van der Hooff and de Ridder 2004). Going further, we

29

argue that for knowledge and wisdom to be effectively used in an organization, the

capacity to communicate complex and abstract ideas must be excellent.

In organizations, knowledge is less a product of individuals and more a

product of interaction within and among groups (Barge and Little 2002). We argue

that wise organizations will develop effective, persuasive and ethical communication

in external (marketing, advertising and PR), inter-organizational, and internal

communication to promote and generate collective wisdom, diffuse tacit and explicit

knowledge through sense-making dialogue, and increase creativity. We also suggest

that questions of aesthetics and art in the communication of abstract thought in

management need to be considered because aesthetics is part of wisdom. This is

important because as knowledge work has become increasingly abstract in a

knowledge society (Tsoukas 2005), it is more difficult to communicate and

understand. Furthermore, in considering affective non-verbal communication, we are

forced to consider aesthetics in relation a broad affective spectrum of mood and

emotion (Ashkanasy 2003), including pleasure, joy, motivations, and so on that are all

aspects of wise judgement.

Intellectual Leadership and the Wise Leader

What is the role of senior management in creating wise practice? Intellectual

leadership is one role that has been ignored in the leadership and knowledge

management literatures (McKenna, Rooney and Boal forthcoming). The best ways of

thinking, for the best reasons, for the best outcomes are needed in a wise organization.

It is crucial that senior managers set the best example in their own work and actively

advocate for wise practice. Central to this line of thinking are Aristotle’s intellectual

and moral virtues (Aristotle 1984; Eflin 2003), which highlight the critical role of

ethics in wisdom and good leadership and statesmanship. We therefore highlight the

30

need for ethics and, in particular, the need for leaders (and others) to strongly commit

themselves to appropriate ethical standards. This consideration is therefore as much

about the intellect as it is about character (cf. Srivastva and Cooperrider 1998).

Intelligent, creative, and ethical activity signifies organizational maturity, which has

no place for brash and rash managerial heroics. In this regard, it is significant that

Collins (2001) criteria in Good to Great for Level Five leadership, the highest,

included humility and people-orientation. If wisdom is to be an organizationally

distributed phenomenon, wise leadership is essential. Such leadership would eschew

unchallenged ideology that produces poor outcomes and abuse of power by leaders,

such as occurred during the ‘downsizing’ phenomenon epitomised by Al Dunlap, and

which normalized corporate greed as epitomized by Enron and WorldCom executives.

We argue that wisdom allows people to get above contemporary ideologies, placing

them in perspective, to select that which is useful, and to reject that which depreciates

humanity and ultimately imperils optimal organizational outcomes.

Management Education & Research

Can wisdom be taught? Essentially it cannot: however, people can be

inculcated into processes that are likely to promote wisdom. Following Sternberg

(2003), who discusses wisdom in school education, we argue that while it may not be

possible to teach people to be wise, it is possible to construct management education

curricula aimed at ‘teaching for wisdom’ at undergraduate and postgraduate business

education levels. In distilling essential characteristics of wise managers from the

wisdom framework presented above and from research on educating children for

wisdom, we identify specific educational activities linked to ethics, creativity,

epistemology and ontology, citizenship, perspicacity, and communication. Consistent

with our understanding of wisdom as processual, integrating, and coordinating, we

31

suggest that a pedagogy should enhance managers’ capacities to create the most

propitious environment in which wise practices can flourish. Importantly, wisdom-

building capacity is notably absent from the attributes ascribed to business school

graduates even though the leadership literature is moving strongly this way.

Avoiding Hubris

So far, we have painted a positive picture of wisdom. However, caution is also

needed in making claims about wisdom based on the assumption that it is intrinsically

good and therefore unquestionable. Equally, one has to be careful of arrogant or

patronising claims to wisdom effectively silencing alternative views by implicitly or

explicitly labelling them as unwise. Csikszentmihalyi and Rathunde (1990: 44) argue

that a disorienting grandiosity and remoteness are dangers that might be associated

with the pursuit of wisdom. These possible tendencies can lead to complacency and a

lack of humility. Nevertheless, as Csikszentmihalyi and Rathunde (1990: 44) also

argue:

What this suggests to our contemporary way of thinking is that, even under the

best conditions, knowledge is dangerous. But then so is ignorance. The point is to

understand what are the dangers peculiar to wisdom so that we can reap its

benefits while avoiding as much as possible of its negative effects.

According to Aristotelian philosophy, wisdom is, by definition, a finely balanced,

difficult, and uncertain thing in itself, and it suggests that to wisely deal with difficult

and uncertain aspects of life, we need to relax our modern urges to make rationality

claims and to seek control. In other words, paradoxically, we might be more in control

if we are prepared to accept less of it. While this might be a wise way of engaging

32

with the world, it is a way that will be hard for many to embrace. It requires faith,

confidence, humility and courage; without these it is unworkable, and this too is part

of the downside. People and groups lacking in these virtues will still make wisdom

claims, to the detriment of humanity, but getting it right will require considerable

determination and resolve that may be at odds with the values that shape management

practice today.

Wisdom also needs to be cognizant of the potential for nostalgic conservatism,

for ways of doing things from former times. We cannot turn the clock back: that is,

conditions, contexts, knowledge, and relations all change over time. To simply wish

things to be as they once were is unreflexive and simplistic. A wiser approach to the

past is to understand what underlying values, conditions, understandings, relationships

and the like produced the conditions to which we fondly look back. On the other

hand, wise people are sceptical about radical panaceas. But again, this does not mean

that a continuous ‘wait and see’ or ‘cautious’ approach is necessarily wise. Typical of

such an unwise ‘cautious’ approach is the Australian Government’s sceptical

approach to global warming since 1996, which led to its refusal (along with the

U.S.A.) to sign the Kyoto Agreement. However, now that the scientific evidence is so

overwhelming and, more recently, that the Stern Review4 presented by a former

World Bank chief economist, has re-cast it as an economic problem, the Australian

Government has rapidly changed its stance, appearing to many as capricious and

populist. In other words, wise actions are those that are appropriate regardless of

whether they appear cautious or radical. Consequently, dissent and breaking with

tradition must be as permissible as caution if the potential for wise practice is not to

be greatly reduced.

Retaining Wisdom

33

Wise people are hard to find, and if the Canadian Public Service Commission

report about wisdom management (Hammer 2002) is any guide, wise managers may

not even want to work in today’s managerialist environment, accompanied by poor

work/life balance as well as ethical, environmental, citizenship, and philanthropic

compromises. Given the disincentives that wise people face, organizations need to

consider how to help people to become wiser and how to create the organizational

conditions for wise practice. Business schools need to consider how best to teach for

wisdom. These approaches may be more feasible and beneficial in the long run than

seeking to recruit one of these rare individuals. Our central observation in this regard

is that, while most of us will never reach higher states of wisdom, we can all become

wiser than we presently are. In other words, wisdom is part of a continuum and it is

segmented: there is a scale of wisdom, and people can be wise or unwise in various

life or organizational situations. Nevertheless, if sufficient numbers of people take this

‘small wisdom’ route or are enabled to do so, great benefits might accrue. Mentors

and emeritus positions are common in universities, so why shouldn’t this model be

applied to profit and non-profit organizations? This point is important because

intellectual labour in organizations is in large degree a collective process.

Nonetheless, wisdom in individuals is vital, especially for those in leadership

positions. Linking wisdom to education, culture, knowledge management,

communication, and leadership is therefore important and likely to be necessary for

successful development of managerial wisdom.

Conclusion

Wisdom presents a major resource for management. Although many of us will

not become fully wise, the components for wisdom reside in all of us to one degree or

another. We, therefore, take an optimistic view that a better future is possible if we

34

can look beyond the accumulative assumptions about knowledge (and technology) to

wisdom. Wisdom requires knowledge, but not necessarily a great accumulation of it.

Wisdom is critically dependent on ethics, judgement, insight, intuition, creativity, and

other transcendent forms of human intellection. Wisdom is concerned less with how

much we know and more with what we do and how we act. Wisdom is a

fundamentally practical way of being in a complex and uncertain world.

Endnotes For a good review of positivist psychology, see Green (1992) and other articles in that issue of

Theory and Psychology. 2 Of course, it is silly to assume that eras neatly separate at particular times. Furthermore, the

characterization of an era always understates the complex diversity of such times. Consequently, we are indebted to Matt Statler for drawing attention to the diversity of pre-Calvinist Europe, in particular the work of Marcel Henaff, whose 2002 work, Le Prix de la vérité : Le Don, l'argent, la philosophie, distinguishes between Weber’s Protestant capitalism and Catholic capitalism in the Mediterranean.

3 For a full coverage of the emergence of business and accounting systems, see de Roover (Kirshner 1974).

4 http://www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_review_report.cfm

35

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