MANAGEMENT THROUGH PRACTICAL WISDOM: Rational-choice theory in management is getting us nowhere. It’s time to look elsewhere for guidance. That’s the provocative argument advanced by Kimio Kase of the Instituto de Estudios Superiores de la Empresa at the University of Navarra in Spain and co-authors César González Cantón and Ikujiro Nonaka in Phronesis and Quiddity in Management: A School of Knowledge Approach (Palgrave Macmillan, 2014). The book posits that practical wisdom, taking into account ethical, emotional and social concerns, is the best way forward in any business situation. “Phronesis,” or practical wisdom, is a term taken from Aristotle. “Quiddity” is Latin for “what it is,” as developed in the writings of the Japanese philosopher Toshihiko Izutsu. For Izutsu, quiddity is reality not only as it is but also as it could be. The book’s central idea is that practical wisdom, in the Aristotelian sense, applied to reality even as it is changing or uncertain, can lead to optimal results in business management. Rational-choice theory has been widely practised in management for many years, but it also has been widely criticised for presenting reality as objective, factual and without moral values. In rational-choice theory emotions, beliefs, character traits and life experiences do not lead to rational decisions, but rather hamper them. By contrast, practical wisdom or phronesis, is tacit, interpretive, creative, moral and interested in the well-being both of the self and of others. Personal integrity, virtue and emotions are all important components of practical wisdom. In a rapidly changing world, the authors argue, phronesis is the best way to solve complex management problems. Phronetic leaders who embody practical wisdom have been successful and inspirational in business. The authors give as examples Sazo Idemitsu, founder of Idemitsu, the second-largest petroleum company in Japan, and Kazuo Inamori, who founded the ceramics-and-electronics company Kyocera and K.D.D.I., a telecommunications firm. Both men prospered while navigating unstructured situations by following their strong personal principles and looking for hidden opportunities. Idemitsu anticipated that petroleum would replace coal as a source of energy and successfully built his company’s markets in unusual ways. Inamori invented “amoeba management” at Kyocera, dividing the company into small, flexible cells and fostering a sense of management among personnel. He built a culture of mutual trust and transparent management while discouraging “fixed” ideas. The two men founded and ran their businesses with a sense of mission and zeal, giving back to society and to consumers and caring about their employees. They also relied on their intuition and their judgment, which led to breakthrough solutions. The authors pay particular attention to how the two businessmen capture the quiddity, or reality, of a given situation as it is and as it could be. Practical wisdom is a product of experience and observation, they explain, but there are some key ideas that underlie an individual’s particular view of the world. Accept that reality changes and is contingent — Acceptance can help quell fear of change and instability. Create habits of good judgment-making — The importance of personal experience in the management arena can be rediscovered through repetition, which will lead to practical wisdom Use training techniques that aim to establish contact with the contingent natures of reality — One such technique is meditation. Value moral ideas and virtues — It’s easy to focus on money, statistics and ideas that can be expressed in numbers and analysed by computers. There’s more to life than numbers, though, and the wise business leader never forgets that.
Posted on: Fri, 02 Jan 2015 05:03:19 +0000
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