PRACTICAL WISDOM AND ORGANIZATIONS

Characteristically, when we try to improve how institutions function, we reach for two tools. The first tool is a set of rules and administrative oversight mechanisms that tell people what to do and monitor performance to make sure that they are doing it. The second is a set of incentives that encourage good performance by rewarding people for it.

 

The assumption behind carefully constructed rules and procedures, with close oversight, is that even if people DO want to do the right thing, they need to be told what that is. And the assumption underlying incentives is that people will not be motivated to do the right thing unless they have an incentive to do so. Rules and incentives; what else is there?

 

But rules and incentives are not enough. They leave out something essential. That “essential something” is what classical philosopher Aristotle calls practical wisdom. Without this missing ingredient, neither rules nor incentives will be enough to solve the problems we face.

 

But is wisdom simply accumulated learning or knowledge? This is often the first thing that comes to mind when we think of what is certainly important, but it is only one part of wisdom in a leader.

 

It is possible to be “book smart,” but overall not very wise. The wise leaders have a deep understanding and keen discernment that allows insight into themselves and others. They can discern inner qualities and relationships even if they cannot always put what they know in words. They can be judicious, prudent, sensible and sane. A capacity for sound judgment, based in significant part on their wisdom, provides a foundation that enables them to choose sound ends and appropriate means.

 

What is the source of this wisdom? Wisdom comes easier to some than to others. Some leaders are inherently more self-aware and more tuned in to what happens in their lives. They learn from their experiences in the best way, accumulating both knowledge and perspective. They neither over nor under generalize. They actively seek to learn from each event in their lives, examining it and themselves, and storing away for the future the essence of learning what they gather. Marie Kane believes that few people function at this level all the time, but the best leaders learn to function at this level increasingly and they actively provide a role model to encourage this attitude and behavior in others.

 

Is wisdom a function of age? Marie Kane answers Yes and No. She opines that it is true that more years provide more opportunity for learning and for building on that learning. It is also true that years alone account for only part of the equation. Years spend not growing and learning do not add to the fund of wisdom that is such a powerful, is somewhat intangible attribute of wise leaders. Conversely, more conscious and intense focus on learning and growing personally and professionally each day can increase wisdom markedly in any one regardless of age. In addition, some people create more experiences and opportunities to grow in a short time than others do over longer time spans. “The most powerful combination is a life of conscious learning and growing, including ongoing self-development both personal and professional, undertaken over time.”

 

People need to develop certain virtues or excellences – like loyalty, self-control, courage, fairness, generosity, gentleness, friendliness, and trustworthiness. But Schwartz believes that the master excellence – the virtue at the heart of Aristotle’s Ethics was practical wisdom. None of the virtues, he says, could be exercised well without it. Acting wisely also demands that we are guided by the proper aims and goals of a particular activity.

 

Practical wisdom combines will with skill. Skill without will – without the desire to achieve the proper aims of an activity – can lead to ruthless manipulation of others, to serve one’s own interests, not theirs. And will without skill can lead to ineffectual fumbling around – a sort of thing we see in people who “mean well” but leave situations in worse shape than they found them.

 

How then, are we to learn to be practically wise? For one, skills are learned through experience, and so is the commitment to the aims of a practice. That is why we associate wisdom with experience. But not just any experience will do. Some experiences nurture and teach practical wisdom; others erode it. Hence attention should be focused on the cultivation of character and practical wisdom by the institutions in which people practice.

 

The rules and incentives that modern institutions rely on in pursuit of efficiency, accountability, profit, and good performance cannot substitute for practical wisdom. Nor will they encourage or nurture it.

 

According to Schwartz, the reliance on rules and incentives may ameliorate problems in the short run but exacerbate them in the long run. This downward spiral is an example of what he calls “ideology” – a process by which false claims about human nature come to look true as a result of institutional practices that are shaped by those very claims.

 

“The concept of ideology, and the self-fulfilling feedback loop that ideology can give rise to helps explain why it is that excessive reliance on rules and incentives undermines practical wisdom.”

 

If you think that people lack skill for wise judgment, you impose detailed rules of conduct. As a consequence, people never get the opportunity to develop wise judgment. Your lack of faith in the judgmental skills of the people you oversee is vindicated, leading to you to impose still more rules and greater oversight.

 

If you think that people lack the will to use their judgment in pursuit of right aims, you create incentives that enable people to do well by doing good. In so doing, you undermine whatever motivation people might have to do the right thing because it is the right thing. Once again your lack of confidence is vindicated.

 

Instead of putting in place procedures that nurture moral will and moral skill, the manager convinced that such attributes are very insignificant to build and run an organization on, puts practices in place that undermine them. “Before long, practical wisdom disappears.”

 

The sages believe that within broad limits, we are what society asks and expects us to be. If society asks little, it gets little. Under those circumstances, we must be sure that we have arranged social rules and incentives in a way that induces people to act in ways that serve the common good. “If we ask more of people, and arrange our social institutions appropriately, we will get more.”

 

 

 

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