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2019 | Buch

Towards Wise Management

Wisdom and Stupidity in Strategic Decision-making

verfasst von: Tuomo Peltonen

Verlag: Springer International Publishing

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This book contributes to the discussion on wisdom in management, leadership and strategy by developing a unique theoretical approach. Integrating rational-analytical, intuitive and philosophical dimensions of wise decision-making, it advocates a broadly Platonic-Socratic view on wisdom. Applying a developed framework of wisdom dynamics, it analyses a number of decision-making case studies in order to discuss the potential of and obstacles to the use of wisdom in broader organizational trends, from the Cuban Missile Crisis to the downfall of Nokia.

Inhaltsverzeichnis

Frontmatter
1. Introduction
Abstract
This chapter sketches the landscape of wisdom in contemporary decision-making for the remainder of the book. I start by noting through a brief review of recent cases how organisations, decision-makers and leaders seem to be ill-equipped to anticipate or handle unexpected events in the broader societal environment, despite the advances in modern information technology and educational outreach. The most perplexing failures of decision-making concern cases that have had a vast impact on the established order of things, and that have been seemingly unpredictable or unthinkable at the time of their emergence. Focusing on these types of strategic decision-making situations under uncertainty, I will then discuss the concept of wisdom and wise management. Philosophical wisdom tradition originates from the early Greek thinking, where it was understood as epistemic humility and the use of transcendental universals in intelligent action. Contemporary business and leadership culture relies on modern notions of scientific knowledge and democratic governance, which could be seen as inhibiting the blossoming of the classical form of wisdom. Lastly, I will briefly review the state of the wisdom research in management studies, and try to locate the broadly Platonic-Socratic approach adopted in this book to the existing contributions, which follow in most cases the Aristotelian notion of phronesis.
Tuomo Peltonen
2. The Three Levels of Wisdom
Abstract
This chapter develops the framework of wisdom that will be applied in the later empirical sections of the book. The framework contains three distinct but interrelated levels of wisdom that are called rational-analytical information, intuitive-experiential knowledge and philosophical wisdom. The first, rational-analytical information, produces knowledge on the basis of a rational decision-making model, often relying on formal techniques such as the cost-benefit analysis in economics. The second, intuitive-experiential understanding, proceeds from a more holistic reflection of the situation that employs intuitive insights to re-evaluate and enrich the outcomes of the rational analytics. Intuition is conceptualised as a set of embodied, emotionally charged and immediate flashes of insight and comprehension that emerge without conscious thinking or deliberate analysis. Noting some shortcomings in the discussions related to the ontology of intuition, the chapter then moves to outline the most wide-ranging level of wisdom, namely the Platonic-Socratic understanding of wisdom, or, sophia. Plato’s view on transcendental universals, or Forms, is used to build a perspective that equates wisdom with knowing and becoming familiar with the unchanging ultimates such as Truth, Beauty, Justice and Good. Plato’s metaphors like the Divided Line and the Cave, as well as the theory of the Philosopher-King are explained as part of the doctrine of philosophical wisdom. A brief discussion on the organisational structures and processes facilitating and inhibiting the pursuit of wisdom is presented, with a focus on bureaucracy, groupthink and new organisational forms. Finally, the chapter discusses the adaptation of the three-level framework for the analysis of empirical cases, arguing for a more Socratic understanding of philosophical wisdom as learned ignorance in the reading of the strategic decision-making examples.
Tuomo Peltonen
3. Case Study 1: Wise Leadership During the Cuban Missile Crisis
Abstract
This chapter presents the first of the case studies examining the processes related to the existence of wisdom in strategic decision-making. The situation explored is one the most well-known incidents during the Cold War: the Cuban Missile Crisis of 1962. Of particular interest here is the conduct of the US president John F. Kennedy in the midst of heightened uncertainty and security risks over the discovery of the installation of nuclear missiles in the island of Cuba. Relying on the published transcripts of the conversations between the members of the crisis group, the chapter seeks to demonstrate the discussions, deliberations and judgement of President Kennedy in the unfolding of events during the crisis. A detailed description of the different phases of this crisis provides gives rise to a more general interpretation regarding the elements of wisdom in John F. Kennedy’s leadership during the confrontation. His ability to read the situation without prejudice, to try to understand the motives and fears of the opposing side as well as the willingness to learn from the failures of the preceding Bay of Pigs operation helped to circumvent the escalation of the crisis into a major military conflict. Apart from these capabilities, it was Kennedy’s insistence on the foremost ethical principle of trying to avoid the use of military power at any cost that proved to be the critical commitment that helped him to navigate through several more extreme opinions in the group and among the army. In this sense, Kennedy embodiment of a moral absolute could be seen as manifesting a case of philosophical wisdom in leadership action.
Tuomo Peltonen
4. Case Study 2: The Wisdom and Stupidity of Military Calculations in International Politics
Abstract
This chapter analyses mistakes made regarding the collection and interpretation of information and the decision-making process in the context of military operations. The two of the cases concern decision-making in war circumstances, whereas the third discusses the role of the intelligence apparatus information production in an escalation of Cold War superpower relations. War cases take a look at the 1944 Soviet attack in the Karelian Isthmus, and the 1941 Operation Barbarossa offensive by Germany against the Soviet Union. In the war examples, supreme commanders trusted their previous experience and ability to filter and analyse massive amounts of information to such an extent that they sidelined the ability of the intelligence machinery and the army bureaucracy to condense and synthesise relevant analytical conclusions from the information regarding the situation. This reliance on informal information and intuitive wisdom, however, demonstrated its limitations in the cases as leaders made erroneous calculations about the enemy intentions based on their experientially induced or ideological beliefs. The third example, in turn, scrutinises the escalation of Cold War superpower relations in the early 1980s, culminating in the Soviet war panic in the midst of a routine NATO war game in 1983. The case highlights the mistakes of the intelligence apparatus in delivering neutral overviews of the mindset of the opposing side. Fears related to previous failures to detect offensive plans as well as the inability to transcend one’s own cultural and ideological presumptions are among the factors that can lead to biased or tinted readings of the policies and mentalities of the adversary. All cases demonstrate in a myriad of ways the pitfalls of foreign policy decision-making relying on military calculations or intelligence information without an adequate input from the sources of philosophical wisdom.
Tuomo Peltonen
5. Case Study 3: Interpretations of the Emergence of the Financial Crisis in the Finnish Print Media
Abstract
This chapter moves the analysis into the domain of economy. Going through a trove of economics-related articles in a leading Finnish daily, Helsingin Sanomat, the chapter focuses on the local reception of the emerging financial crisis in the public consciousness and expert opinion during 2007–2009. Media reports consistently downplay the extensiveness and severity of the ensuing crisis that evolves from the problems of the mortgage sector in the US. Comparing to the available statistical and other objective indicators, the comments of economists, politicians and journalists tend to lag behind the developing trend of a major disruption within the financial markets. Four dimensions in the viewpoints and understandings of the commentators and media editors are highlighted from a wisdom theory perspective. Firstly, the articles are primarily based on analyses and forecasts published by economic organisations, central banks and economists working for banks, instead of other specialists or academicians. Secondly, economists and politicians alike are constantly offering disproportionately optimistic forecasts, without alternative interpretations considered. Thirdly, the insights of the experts changed suddenly from a state of relative certainty to one of extreme uncertainty. As the severity of the crisis became apparent, economists abruptly abandoned arguments based on objective statics and scientific modelling, declaring instead a thoroughgoing lack of knowledge regarding economic reality. Fourthly, in the light of the media material, the conceptualisation of visions for the outcome of the crisis was plagued by a lack of imagination. Commentators and the journalists reporting various analyses were incapable of envisioning a worldwide financial and economic collapse, concentrating instead on the minor disturbances and issues within the immediate past of the seemingly ordered global economic system.
Tuomo Peltonen
6. Case Study 4: The Collapse of Nokia’s Mobile Phone Business
Abstract
This chapter provides a wisdom-oriented reading of one of the most spectacular business failures of recent times: the collapse of Nokia mobile phones between 2007 and 2015. Using executive biographies and other published accounts of Nokia’s organisational patterns, the chapter attempts to offer a more balanced explanation of the processes behind Nokia’s inability to respond to the changing industry circumstances. The following analysis pays attention to the shaping of Nokia’s organisational culture. Company and its new leadership adopted a professional, no-nonsense approach in the aftermath of the problems of the late 1980s and early 1990s. The new generation of managers believed in a rational mindset supported by a bureaucratic organisational form. Leaning on a superior technological competence within the mobile phone sector, Nokia was capable of ultimately becoming the market leader. However, in 2007, with two major players, Apple and Google, joining the business, the established rules of competitive dynamics were irrevocably changed. Focus shifted to software and applications. Nokia’s risk-aversive and closed organisational culture could not respond in a situation where an open search for new innovations and a cooperative internal working mode were needed. An analysis of the development of Nokia’s organisational psyche following the emergence of a new generation of managers and executives highlights the role of local beliefs in using philosophical wisdom in critical circumstances. Nokia and its leadership were not able to abandon the outmoded habits and structures, as these had become integrated with the very identity of the company.
Tuomo Peltonen
7. In Conclusion: The Opportunities and Obstacles of Reinforcing Wisdom in Management
Abstract
This chapter returns to a more general discussion on the nature of wisdom in decision-making. It first reminds of the central thesis of the book: failures in decision-making or forecasting demonstrate often a lack of philosophical wisdom and associated capability for intuitive reflexivity. The rest of the chapter then discusses the ways to enhance and sustain wisdom among decision-makers and leaders. The first theme deals with the importance of gaining multifaceted experience from different sorts of situations as well as learning from a variety of organisational and societal experiences. This is then followed by a contemplation on the practical arrangements needed for management to adapt wisdom in its decision-making processes. Contemporary management education offers few possibilities for the participants to develop philosophical wisdom or intuitive sensitivity. Similarly, the broader university system is geared more towards productivity than lifelong nurturing of classical wisdom. The classical elements of Liberal Arts education have in this respect potential to support the attainment of wisdom. Of interest is also the nature of careers that lead to a decision-making position in organisations and society. Contemporary career systems tend to favour candidates who conform to the established values and beliefs of the institution and are skilled in career politics. Philosophically wise persons, however, tend to come from outside of the mainstream thinking. To open up possibilities for wisdom in decision-making, it should be necessary also for outsiders to be able to reach executive positions. A separate institutional and educational realm of “wisdom incubators” might serve such a function in economy and society.
Tuomo Peltonen
Backmatter
Metadaten
Titel
Towards Wise Management
verfasst von
Tuomo Peltonen
Copyright-Jahr
2019
Verlag
Springer International Publishing
Electronic ISBN
978-3-319-91719-1
Print ISBN
978-3-319-91718-4
DOI
https://doi.org/10.1007/978-3-319-91719-1