Wise Management in Organisational Complexity

M. Thompson, D. Bevan, M. Thompson, D. Bevan

• Publisher: Palgrave Macmillan
• Year: 2013
• Print ISBN: 9781137002648
• eBook ISBN: 9781137002655
• Topic: Business
• Subtopic: Business General
• Index: Business

Provides a resource of wise praxis and reflection in the context of organisational complexity for managers, researchers and teachers in management education. Offers various explications and applications of Aristotle's notion of phronèsis (practical wisdom) and reflects on the responsibilities of companies and education institutions towards society.

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Wise Management in Organisational Complexity: An Introduction

Mike Thompson and David Bevan

The mission of the China Europe International Business School (CEIBS) is to educate responsible leaders versed in ‘China Depth, Global Breadth’. The CEIBS Euro-China Centre for Leadership and Responsibility (ECCLAR) supports that mission by creating and disseminating knowledge on the practice and development of wise and responsible leadership especially in the corporate context. This collection of essays furthers that mission in providing a resource of wise praxis and reflection in the context of organisational complexity for managers, researchers and teachers in management education.

Interest in wisdom as a topic for research has been growing across the disciplines of organisational studies, leadership studies, philosophy, psychology and ethics. Blanchard-Fields and Norris (1995, p.105) note that ‘wisdom has been legitimatised in the science of psychology by operationalising it into a knowledge system framework, i.e., borrowing from an established scientific approach’. Psychological theorists have posited that wisdom is a multidimensional construct characterised by cognitive, affective and behavioural dimensions that develop increasing integration over time; included in this latter process is the often painstaking effort at integrating opposing self-schemes and reflecting on the experiences of self and other (Kramer, 2000).

Scholarly attention to wisdom in management is, according to Mick, Bateman and Lutz (2009), either strictly conceptual, oriented solely toward the management field or focused on organisational level analysis (not individuals and their decision-making or behaviours). In the field of leadership studies, McKenna, Rooney and Kimberley (2009) have led the way in arguing for an augmentation of existing leadership models with the wisdom dimension. They argue that

wisdom is critically dependent on ethics, judgment, insight, 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 way of being and is fundamentally practical in a complex and uncertain world. (McKenna, Rooney and Kimberley, 2009, p.187)

The authors of Wise Management in Organisational Complexity underpin their perspectives of wise management in business with the ideal of balancing the requirements of profit while wisely managing the implicit and explicit responsibilities of companies towards wider society. This dynamic balance is what Mary Gentile calls the higher purpose of business, or what may be regarded as the renovated ideal of the common good. Robert Chia, Robin Holt and Li Yuan give the example of Konusuke Matsushita as one person who exemplifies the dispositions of experienced ‘wise’ business people. Such individuals, they say, offer a service that reflects a ‘vocational opportunity to perfect oneself and at the same time contribute to the common good’ (p.63). Jay Hays expresses this simply: ‘A wise act is a deliberate one that concerns the common good; it serves interests greater than the self’ (p.138), and, as Li Yuan observes, ‘wise and virtuous business leadership in modern society not only benefits organisation, but also serves the wellbeing and harmony of society as a whole’ (p.108). Their findings concur with the conclusions of Birren and Svensson (2005), who find that the promotion of the common good and rising above self-interest is one of the most consistent subcomponents of wisdom from both ancient and modern literature.

A distinctive feature of this volume is the various explications and applications of Aristotle’s notion of phronèsis (practical wisdom) described by Bernard McKenna as ‘the ability to act virtuously in difficult situations’ (p.15). Jean-Jacques Rosé and François Lépineux provide a semantic analysis of phronèsis as a means of addressing the disruption caused by agents ‘forgetting all elementary principles of prudence, and playing a game as if it had no limits’ (p.70). In such times of crises, short-termism and the dysfunctions of hubris challenge the effectiveness of quantitative management and ‘call for wise management so as to safeguard management itself’ (p.69). For Rosé and Lépineux the antidote to this hubris is Aristotelian phronèsis which is ‘the spring that enables the definition of wise management for the twenty-first century’ (p.76). They re-articulate the phronèsis of Nicomachean Ethics and Politics, nuanced by extensive and original references to postmodern, or continental, authors.

Peter Verhezen and Bernard McKenna each express a concern that instrumental rationality, such as formalistic corporate governance rules and pecuniary corporate incentives, should be adequately balanced with value rationality which, McKenna says, is becoming increasingly difficult if not impossible. He points to often well-intended but ultimately disabling regulations and laws that take agency from those who then follow safe legally endorsed courses rather than the wise course. The conflicts between wise decision-making and the quality of independence in corporate governance structures is addressed by Verhezen, who argues that boards that are genuinely guided by practical wisdom perceive independence as a state of mind, not as a legal compliance issue. For Verhezen, a wisdom approach to corporate governance is now required for managers, so that the prospect of pecuniary gain does not affect their decisions and actions adversely. Verhezen’s view of managers is informed by readings of MacIntyre, for whom managers too easily operate ‘outside of ethics’ and seek only to fulfil actions. On this basis, corporate governance founded on managerial responsibility and accountability can only arise under wise leaders with the necessary integrity, knowledge and experience. This is a continuously emergent and reconstitutive process, or activity, involving integrity, knowledge and professional experience.

Phronèsis is one of three words that Aristotle uses in his discourses on wisdom and virtue. McKenna gives an overview of technē, the expert knowledge of a trade or profession); nous, an intuitive capacity, and sophia, a metaphysical capacity. Wisdom is thus presented as ultimately being concerned to enhance social eudaimonia, or human flourishing and living the virtuous life, specifically: humility, courage, temperance and justice. For Aristotle, McKenna says, ‘the wise person acts virtuously when dealing with the shifting contingencies of life and situations. They do this by being reflexively intuitive and possessing human(e) instincts’ (p.15). His chapter also draws from philosophical and psychological paradigms to apply wisdom to an organisational context, suggesting that a tri-level framework (macro, meso and micro) is useful. McKenna then considers whether wisdom should be measured, and evaluates the measures used by the ‘Berlin School’, Sternberg and US empiricists. From this analysis, five core elements of wisdom are derived. However, he further argues that an ethical foundation and conation are necessary other components of wisdom and proposes a list of wisdom criteria as the foundation of ‘social practice wisdom’. He summarises wise thinking as being ‘rational, based on sound knowledge, but is also intuitive, ethical, and capable of metaphysical reflexivity. It is the explicit combination of intuition and science, values and truth, intuition and transcendent cognitions to solve real-world problems’ (p.15).

In his chapter, ‘Empirical Wisdom Research: A Community Approach’, David Rooney puts forward the case for wisdom as an alternative research approach. He is critical of a hegemonic tendency he perceives in the rigid approach to research excellence predicated on a disciplinary silo approach to management. This, he suggests, has emphasised the tendency for business schools to become marginalised from management practice. Rooney challenges us to accept organisational complexity as a twenty-first-century ‘given’, and to extend our practice of wisdom to find new interdisciplinary, methodological and pedagogical approaches. He observes that contemporary empirical research about wisdom has been done by psychologists and that this research has added significantly to our knowledge of wisdom, but sociology (broadly defined) and business research is missing. Rooney wants to broaden the methodological spectrum beyond what psychologists have used with phronetic research which requires the integration of methodologies: ontology (ways of being and becoming), axiology (values and value), epistemology (knowledge creation), praxeology (enactment or application of knowledge) and eudaimonia (wellbeing or human flourishing). It is the integration of each of these into the foundations of a coherent methodology that matters.

Rooney’s radical suggestion is to approach wisdom research through action, convened in community-of-practice type settings. He proposes that wisdom is the means, or at least a metaphorical lens, through which twenty-first-century academe may be reinvigorated through a complex systems approach. Rosé and Lépineux are likely to be in such a community-of-practice with their commitment to demonstrate how phronèsis can be the means that renders possible the integration of moderation into governance, so that economic transition and paradigm shift do not remain utopias but actually become the finalities of business praxis. Their approach will rely on an attempted synthesis of paradigms combined with the systemic integration of the empirical contribution of humanities and social science to management practice and education delivered by business schools according to the three levels of application of practical wisdom: micro, meso and macro.

Yuan explains why Chinese leadership research cannot be isolated from the Chinese cultural context, especially as defined in philosophical Confucianism in which ethics is inseparable from the practice of leadership. In her chapter, Yuan proposes a ‘Confucian meritocracy’ as a leadership standard which fully values knowledge/ability/skill and ethics. Confucian meritocracy requires leadership by the wise, those who possess both virtue and ability in the Confucian sense.

Po-Keung Ip also finds meritocracy to be a central value in the practice of Wang Dao (the ‘Kingly Way’) management in the case of Stan Shih of the Acer Group and his commitment to the practice of Wangdao management. Both Mencius and Xunzi explained the nature of the Wang Dao/Kingly Way by contrasting it with a competing way of ruling – the Hegemonly Way (Ba Dao), which was the dominant ruling philosophy and practice of the Warring States Period in Ancient China. Wang Dao is rule by moral rightness and benevolence in contrast to Ba Dao, meaning rule by brute force and conquest. The content of the classical idea of Wang Dao, which is political in nature, is reconstructed with respect to the core of the Confucian moral element – ren (benevolence), yi (rightness), li (ritual-following), zhi (wisdom) and xin (trustworthiness). Its organisation and corporate version is worked out as Kingly (Corporate) Governance. Ip explores the extent to which Kingly Governance is wise management based on recent conceptualisations of wisdom in the literature.

Mark Strom’s chapter, ‘“To Know as We Are Known”: Locating an Ancient Alternative to Virtues’, presents a contrary view to Aristotle and the Hellenistic moral philosophers. Aristotle’s schema, he argues, is elitist, not egalitarian and geared to the status quo and not to transformation. He explores the legacy of Paul of Tarsus which he asserts is obscured by anachronistic, Christian readings. But when Paul is read in terms of the history of ideas, several major innovations appear, and Strom focuses on three. First, grace inverted the Greco-Roman social pyramid. Second, ‘transformation’ entered Western vocabulary as a positive term. Third, a relational epistemology was outlined – ‘to know as I am known’ – that challenged the detached and elitist rationalisations of classical philosophy. The mode of this relational epistemology was faith, hope and love. Yuan also identifies love as a guiding virtue in Confucian thought. However, unlike the love espoused by Paul, based on grace, Confucian love is graded according to the proximity and distance of each relationship. Yuan explains that to deny the graded relationship is to obstruct the path of humanity and righteousness and even destroy the harmony of all things, as the hierarchy of everything that exists in the universe. Strom concludes that the innovation of grace reframed phronèsis from Aristotelian conventionality to a mindset that opened the way to the modern ideas of equality and fraternity. Transformation became a universal hope and knowledge was reframed as relational: ‘to know as I am known’, animated by faith, hope and love.

Chia, Holt and Yuan in their chapter, ‘In Praise of Strategic Indirection: Towards a Non-instrumental Understanding of Phronèsis as Practical Wisdom’, draw on Western (Aristotle) and Eastern (Lao Tzu) concepts of wisdom to approach organisational complexity. They suggest that we abandon the established, dichotomy-laden thinking that leads to all strategy being based on pre-determined outcomes. In place of this purely rational approach, Chia, Holt and Yuan invite us to be less Western (seen as direct) and more Eastern (seen as indirect): not either/or, but both/and. Here they neologise the concept of strategic indirection as a means to non-deliberative change.

In addressing the context of organisational complexity the authors are, as with the focus of wise management, equally polyphonic and complementary. McKenna establishes complexity as an inherent contextual given of both organisational and social interaction, to the extent that any plausible exercise of wise management must be able to survive its paradoxical and incommensurable uncertainties. Complexity is a naturally occurring context that undermines ‘the natural human desire for linearity, predictability, and equilibrium’ (p.27) and which, perhaps, suggests that some wise resilience is the optimal reaction. For Rooney this organisational complexity is also paradoxical as well as systemic. Complexity here is effectively globalised and – perhaps following such globalisation scholars as Scholte (2005), Beck (2000) and Giddens (1999) – it is a structural agent of multiple, unintended consequences, and must be considered in any reactions to paradoxical challenges. In many ways explicitly following McKenna, Simon Robinson, too, finds structural pragmatic links between complexity and globalisation. Robinson focuses on the trait of massification: ‘the increased numbers of students, partly realised because of the social narrative of equality of access, sets up another complex narrative around providing customers with the best possible experience, given increasingly limited human and material resources’ (p.184).

On a similar tack, Rooney scopes and constructs his communitarian approach to social practice wisdom around the concept of

a complex, multidimensional integration that creates clarity and decisiveness through equanimity and corresponding dispositions that generate the insight, composure and motivation to deploy the resources needed to act exc...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Illustrations
• Notes on Contributors
• 1 Wise Management in Organisational Complexity: An Introduction
• 2 The Multi-dimensional Character of Wisdom
• 3 Empirical Wisdom Research: A Community Approach
• 4 In Praise of Strategic Indirection: Towards a Non-instrumental Understanding of Phronèsis as Practical Wisdom
• 5 From the Financial Crisis to Wise Management: The Relevance of the ‘Return to Aristotle’
• 6 ‘To Know as We Are Known’: Locating an Ancient Alternative to Virtues
• 7 Wise and Virtuous Leadership: The Contribution of Confucian Values to Business Leadership
• 8 Wang Dao Management as Wise Management
• 9 Wicked Problem: Educating for Complexity and Wisdom
• 10 In Search of Wisdom
• 11 Giving Voice to Values: An Innovative Pedagogy for Values-driven Leadership Education
• 12 Hearing Voices: Wisdom, Responsibility and Leadership
• 13 Managerial Wisdom in Corporate Governance: The (Ir)Relevance of Accountability and Responsibility at Corporate Boards
• Index