Theory of Knowledge for Business
By Bart Vanderhaegen
Theory of Knowledge for BusinessAug 30, 2021
Episode 156: Epistemology, the most important subject nobody is talking about
Why is epistemology so important ?
And why is it not talked about ?
Episode 155: How to let ideas "compete" ?
3 concrete tips:
Express ideas as explanations
Say how an action will transform a situation or capability, and why that action
NOT : subjective opinion about importance (loose actions / goals)
Avoid positive arguments
Arguments appeal to authority
Encourage alternative ideas
What other actions could lead to the same goal
What other better goals can be achieved via these actions ?
Episode 154: What is the fastest way to grow knowledge ?
“The fastest way to grow knowledge is to set up a "competition" between *multiple* ideas, all vying to solve the *same* problem”
Episode 153: “Our strategy needs to be clear so we can all be on the same page “ (and why that’s wrong)
Mistaken for multiple reasons:
- You cannot be 100% clear about ideas
- It's coercive
- It's good that we have conflicts of ideas: only those lead to improvement of ideas
Episode 152: We need to make sales more fun again ! (but we’re doing the opposite)
Sales is not easy, and all things not easy can be made fun. More on that later
What is not fun about sales now
Inherently disappointing : getting so many no’s for 1 yes’
We make it dull or frustrating in two ways
by the typical KPI management
Discussions about numbers
By throwing vague ideas around
Customer is key / our products have value
Can say that about everything at all times, it does not solve any problem
By justifying “the right way” all the time
“You should just sell like this and the business will grow”
If it doesn’t work, it is frustrating to having to repeat that all the time
It does not allow for alternative trials/ suggestions
What do we do to compensate, but what does not make it more fun
Coaching
Often analysis of who you are and what you should do to improve
At the level of your personhood, not ideas to can help you sell more
Also quite generic, simple tests, simple ideas (be more self conscious, we are all in this together)
What can actually make sales more fun ?
Approach it as a problem solving exercise
The problem of what to do or say so that the subjective valuation of your product by the customer goes up
You need a theory
About the valuation
About what to say or do
You need to improve your theory
Find better ways to convey
You can do that together with other sales people
Not as just sharing opinions
But really testing the theory “what is we did A instead of B, what would happen, and why ?”
Creativity ! new ideas / improved theories !
The role of data: to point to an issue / not something you derive conclusions about
All actions are a test of your theory. They provide useful information to change it or improve it. Don’t just celebrate succes, but more importantly learn from mistakes !
There is an objectively best theory about what to do to persuade a customer, it’s fun trying to seek it out, by throwing out ideas that don’t work and replacing them with ideas that might work
Episode 151: How does knowledge grow ?
Ideas/ knowledge can only change in 3 ways:
- Preventing them from changing: you secure them from changing by justifying their truth, by adding arguments to them that say why they are true, e.g. appeal to authority arguments.
- Subjectively adding parts to them (without critically investigating) that you feel are missing / or throwing out parts that you feel are not needed
- Actually improving them: you find flaws in them and try to correct them
Episode 150: It is not people who solve problems, it’s ideas that solve problems
About the (intuitive) misconception: it’s people who solve problems, not really ideas
Episode 149 : The common flaw in both “hard” and “soft” management methods
"Hard" management methods: Focused on measurements (deviation between a target/ forecast and actuals), setting up authority (hierarchy, roles & responsibilities), predictions (visions, targets, goals, …), providing "clarity", ...
"Soft" management methods: Focused on putting “people” central, with the idea that performance follows when people feel good
Episode 148 : There is something fishy about the “blue” color type in the Insights Discovery people assessment
Sharing a quibble I have with the "blue" people characteristic in the Insights Disovery people assessment method.
Episode 147 : The 2 very different types of answers to “why?” questions
The same question "why?" about some phenomenon in reality can have 2 very different types of answers: (i) the proposal of a causal explanation and (ii) the justification of the truth of the phenomenon
Episode 146 : Forget “result-driven/ action-driven”, try to become “explanation-driven”
An explanation is a consistent mental model of a transformation/ task/ change, and it contains:
- The result or goal you want to achieve
- The actions required to achieve that goal
- The arguments why (why that particular goal (and not some other), why will those particular actions lead to the goal (and not some others))
Episode 145 : Why is epistemology relevant and important ?
Epistemology is relevant when explaining *any* human activity, as it is a better/ deeper explanation than explanations at the level of behaviours (actions) or personality (assessments of persons as a whole)
Episode 144 : on the use of KPIs
Key aspects discussed related to how companies typically use KPIs
Start from the KPI and not from the problem and solution (for which the KPI was supposed to be an indicator)
Corrective actions are parochial and without causal power
Corrective actions that have causal power are corrective explanations and contain not only an action but also a goal and argument for how the action will cause the goal, but the corrective explanation is disconnected from the original explanation, i.e. does not serve to improve either one of both or both
KPI focus leads to the idea that only KPIs are a relevant source to criticise a solution. Whereas *any* creative argument can serve as good criticism to improve a solution (think about the aspects of a solution that are still not measurable because too early stage for example)
Episode 143: There is no problem solving method (and that is a good thing !)
There are no "problem solving methods".
Reason being that if there were such a method, we would be able to automatically crank out solutions by simply following it.
The same goes for the "scientific method" (science is also problem solving). For example, Einstein had 2 miracle years (1905 and 1915), but followed "the scientific method" every day of his 40+ year career. If there was a valid scientific method, his output would have been much more smooth over that entire period.
Solutions to problems come from creativity, and improvement in solutions comes from correcting mistakes in the solutions. Both creativity (having ideas) and error-correction can not be prescribed by a method.
Which is a good thing ! It allows novelty, progress, improvement, ...
By the way, there is a method for "problem definition" though: the steps to take to define a problem, i.e. the AS-IS vs the TO-BE, the obstacles in between, the root causes of them, ... But defining a problem is still independent from the idea that will solve it.
Episode 142: The austrian economics argument for why money creation cannot increase wealth in society
Does money printing create wealth ? Austrian economics says no and with a very simple but powerful logical argument.
Episode 141: On David Deutsch’ “Knowledge is information with causal power”
Some thoughts on David Deutsch” definition of knowledge as ‘information with causal power”
Also some ideas on how to use this in organisations
Episode 140: The problem with problem solving
It is not contested that managers rely on their teams to get problems solved.
However, in practise this turns out less easy than stated here. I go into some of the reasons why it is not trivial and concrete ways for improving this.
Episode 139 - The austrian business cycle theory
Episode 138 - In the long run, the strength of an organisation is only dependent on the quality of error-correction inside
Unpacking the slogan ...
Episode 137 - A critique of the Lencioni pyramid in teamwork
The natural state of any relationship is that fact that ideas differ. That is not “a shame” … or a proof that there is distrust. It is just the natural starting position. If it were a proof of distrust, then the first step would indeed have to be to start developing trust
Instead, trust emerges, but is not a methodological primary step to achieve
The moral process and the knowledge creation process run in parallel.
- Moral: being open, not lying, not being opportunistic, listening ….
- Knowledge creation : the correction of errors on both sides
Episode 136 - A criticism of and alternative to the DMAIC method in continuous improvement
DMAIC:
- Define the problem (Set the goal, ...)
- Measure the problem (AS IS, ...)
- Analyse (Root cause analysis, ...)
- Implement (Find solutions test and implement)
- Control (Monitor and sustain improvements, ...)
Popper’s method:
- Problem definition ( "What to do next ?" Given the ... Root cause analysis, AS-IS / TO-BE, ...)
- Tentative Solution (Tentative answer to the what to do next question, i.e. a guess for what to do to solve the problem)
- Error-correction (Using not only data but also argument)
- New Problem
Episode 135 - Problem solving methods: the crucial ingredient they don’t mention
Illustrating what methods don't mention via the DMAIC problem solving method
Episode 134 - Two radically different approaches to problem solving
Comparing the Popperian method to problem solving to it's alternative
Episode 133 - The problem with ESG as a vehicle for moral progress in companies
Thoughts on why I think ESG is not a good vehicle for moral progress in companies
Episode 132 - How I got into Austrian Economics
Some thoughts on why and how I took up an interest in Austrian Economics
Episode 131 - A new brainstorming format and procedure
<li>Start from a problem (incl. scope, conditions for good solutions, …)</li>
<li>Generate ideas with idea owners</li>
<li>Separate session on criticism in group (NOT adaptations)</li>
<li>Idea owner’s free choice to adapt idea or not</li>
</ol>
Episode 130 - Management, just like science, is "explanation based", and not "evidence based"
Knowledge creation is "evidence based" when it starts from evidence, and "explanation based" when it starts from a problem and a (guessed) explanation for how to solve it
Episode 129 - Why all plans are wrong and why that is a positive thing
All plans are wrong for 2 main categories of reasons
- The goal is wrong: What you really get when you execute the steps may not correspond to the stated goal. Or the goal conflicts with another goal you want to achieve
- The steps are wrong: you need different steps to achieve the goal you said to achieve
There are 2 ways to deal with this:
- The bad way: seeking positive arguments
- The good way: seeking criticisms and improve the plan
Episode 128 - Two opposite conceptions about what science is: the inductive method versus Karl Popper's explanation
Covering two opposite conceptions about what science is: the inductive method versus Popper's method
Also briefly covering what the relevance of this is to all our "other" types of knowledge (e.g. sociological, political, moral, ...)
Episode 127 - Why do we like personality tests so much ?
We seek answers to the question "Who am i ?"
But is that possible ? What is the alternative ?
Episode 126 - The role of goals and goal setting in a companies
What you can not use a goal for:
- Derive what you should do next
What you should not use a goal for:
- As an infallible prophecy of the future that cannot be wrong
What you can use a goal for:
- Challenge your plans - eliminate things from your plan that will NOT get you to the goal
- Only one of the many ways to improve your plans, not the only one !
Episode 125: Are you an optimist or a pessimist ?
Introducing 2 possible approaches to answering this question ....
Episode 124 - Two basic problems with KPI’s
They cannot confirm your plans (only falsify them)
- They take away the attention from other ways to improve, other than measuring things (arguments)
Both problems are soluble
- Notice KPIs only when they contradict a plan
- Spend more time on critical arguments rather than measurements only
Episode 123 - People can only act upon their own ideas
We act upon our ideas - our behavior is a consequence of our ideas (goals, plans)
Ideas can be explicit, inexplicit and subconscious
Ideas evolve via conjecture and criticism
Now, when we want to make people do things, we try to replace existing ideas with new ones
Episode 122 - There are no departments/ units/ divisions in companies, there are only ideas and conflicts of ideas
Departments like Finance, Sales, … are constructs (to label and structure where people are)
What really exists are problems: conflict of ideas
For example: Finance wants customer payment periods shortened for working capital reduction, sales want to give longer payment terms. 2 ideas are conflicting here. You can never say that Finance deals with this, because sales is going to counter argue.
The solution to the conflict is never black and white IN a particular department
It is a mistake to think it should. “We are finance so we decide on payment terms”
It is all cooperation around a conflict of ideas from both sides. The solution that is implemented CAN EVEN come from a sales guy … or from any outsider. And those can be good solutions.
Or a sales person can criticise an initial solution from Finance, making Finance change their solution. Can you then say that the Finance department solved it ? No you can’t
What is the concrete implication: do not restrict solutions too narrowly to departments, set-up open, cross-functional teams to solve these problems, understand that solutions evolve via criticisms from many parties, making them eventually much better than the initial idea
Episode 121 - What exactly are you hiring when you are hiring people?
People are the collection of ideas plus a universal capacity to change or improve them
When we hire people, we hire both aspects.
Episode 120 - “One way of working” programs in organisations
Many companies launch One Way of Working programs
Why
- Oversee complexity - you don’t see it in small companies
- Monitor and control deviations
Flaws
- Methodology is never the key driver of impact
- People act in vitally unique ways every day when solving problems
- Take the autonomous thinking out of people’s job
- Problem solving is impeded or delayed
Episode 119 - The difference between prediction and explanation in business
We want to change in companies: from any current state to any new state (goals/ objectives). We need 2 things for that: a prediction (of the goal we want to reach) and an explanation for how to actually reach it (current state, actions, decisions, milestones, issues, ...)
We focus on predictions too much : the goals in and of themselves / plus the KPIs to show how far we are away from the goals, the rewards when reching the goal, the importance of the goal, ...
What is more important is to have good explanations for how to reach goals
- For people to reach goals they need to know how. You can’t reach it without knowhow
And criticisms to improve those explanations
There are however still good and bad explanations
Bad explanations: “If you take your responsibility, you will reach the goal”
- It is close to true but a bad explanation, it doesn’t explain how the goal will be reached
Good explanations: clear plans, with real-time updates whenever you learn from criticisms
- Either from trying something or aligning/ correcting something in the plan before trying it out
The real knowledge is in the explanations, not in the goals not in the KPIs
Recommendations:
- Explanations should get more time
- Explanations should be written down (apart from all the goals and KPIs that are already transparant)
- Criticism instead of seeking support for your explanation
Episode 118 - The difference between “moralising” and solving a moral problem
Moralising
- Start from a situation that they consider a moral problem
- Something immoral, unfair
- But then …
- Reverting to blaming the people,
- generalizing from a specific event to general characteristics of the person in question or groups of people
- Excluding the possibility that people can learn from mistakes
- Appealing to condemnation of those people
- Signaling that you are not one of those people, that you have more truth
- Reverting to blaming the people,
Solving a moral problem is the opposite
- Identifying the problem, even asking if it is a real moral problem
- Go into the specifics of the problem, the context, the actual events, criticisms on certain claims about the event … consider all your claims fallible, you seek more truth
- Propose and test solutions
Episode 117 - Appearing on the Economics for Business podcast - Mises institute
Sharing the recording of my appearance on the Economics for Business podcast where I talked about the experience of Flow and how to create open organisations that allow for more Flow experiences
Episode 116 - Some thoughts on Change Management
Change is unpredictable
- What you think the change will be
- What I think the change will be
- What the change really is going to be
Change can be overstated
- Because it is unpredictable, we tend to overstate it
- Cynical approach is taking over
- People change all the time however.
Change is content related
- People’s acceptance of change is linked to the way they perform their new work
- It is not linked to or less dependent on how well you communicate the change
You need a minimum of autonomy to figure out how to accommodate for the change
- Even if hard decisions have been made at the level of process or software, their consequences at the level of the work of everyone are not fully determined yet
Episode 115: Name change of the podcast
Short announcement of the name change
Episode 114 - The difference between fallibility and failing
You have failed versus you are fallible
- You have failed = subjective judgment, because the standard against which you have failed can be anything to anybody
- The same objective series of events can still be labeled as failures or success depending on the subjective standard you want to measure them against
- You are fallible: objective, there is objective truth and you can be objectively wrong about it
Why is fallibility important, regardless of failure of success?
- It is the only way to allow to detect where you are wrong and try to correct it (improve it)
- It has 2 opposites
- Relativism: I am already correct as what is true is what I consider to be true, other people may consider other things to be true. I cannot improve upon my claims because I assigned them already as true for me
- Dogmatism: I know I am right because I have infallible knowledge that cannot be improved. I have absolutely true knowledge in my hand already
Fallibility and failure are independent of each other, have nothing to do with each other
- You can have failed and still learnt something about your plan/ goal
- You can have failed and also NOT learn something about your plan/ goal
- You can have succeed and have learnt something new
- You can have succeed and not have learnt something new (your plan was sufficient for the problem at hand, or you have been lucky, or the subjective standard for success was so general …)
All 4 combinations of fallibility and failure are therefore perfectly possible
One danger is to equate fallibility to failing: admitting that you are objectively wrong is often equated to failing. And that is wrong, it is admitting that you are looking for improvement of your ideas and that you are not falling in the trap of relativism or dogmatism. So fallibility is something that should be encouraged in organisations ! Failure of course should not be encouraged, but it will not when you encourage fallibility. One because they are completely different things and Two because fallibility is the key condition of knowledge growth, and when problem become more complex, knowledge growth IS the key thing you need in order not to fail !
Episode 113 - You cannot justify a decision by appeal to authority
Authority can never be a "logically correct" justification for taking a particular decision.
Instead what we do (individually when contemplating a decision, or together) do is compare the content of candidate decisions, criticise that content (incl. consequences) and take the decision that survives criticisms best.
Episode 112 - The kinds of questions your organisation structure does not answer
An organisation structure is any theory about:
- How to divide work in entities and departments
- How to organise those entities "internally"
- How to organise the connection between those entities
However, it is a theory that is completely distinct from that other important question: "How to capture value in the market, consistently ?"
Episode 111 - 100 management gurus against 2 philosophers
What I learnt from the theory of knowledge that I didn’t learn from reading 100+ management books
Episode 110 - The key question a CEO should lie awake about at night
The question for all CEO's: "How am I making it easy to correct errors in my organisation?"
People are solving problems. They do that with idea’s. Some ideas are suggested, but many need to be developed. All initial ideas contain errors.
Now there is a simple 2 way outcome: 1) either people correct their errors or 2) people don’t
An organisation should be judged in how easy it is for people to correct their errors
Hard: no transparency, blaming and shaming, authoritarianism, superficial opinions without good explanations (why?)
Easy: comfortable with criticisms, allow to make errors (before they do harm), seeking good explanations
Episode 109 - Why personality tests (MBTI, Insights Discovery, …) are a denial of human creativity
About personality tests such as MBTI, Insights Discovery, DISC, ...
Episode 108 - IN DUTCH - 1 van de minder slechte argumenten van anti-vaxxers (over testen met vaccins)
Dutch version of episode 107
Episode 107 - One of the less dramatic arguments of anti-vaxxers (on vaccine testing)
There are dramatic and less dramatic arguments of anti vaxxers. The dramatic ones are the ones dealing with the 5G chip implanted in the vaccine or the conspiracy theories of virologists and politicians to make the people obey and stay home …
But some arguments are less dramatic than those (but still false though).
An example of this kinds of arguments: The vaccines are not tested for the long term effects